BANGKOK — Shares were higher in Asia on Friday, despite data indicating economies are slowing. The advance followed gains on Wall Street, where the market is heading for its first weekly gain after three weeks of punishing losses.
Tokyo’s Nikkei 225 index added 1.2% to 26,491.97, and Seoul’s Kospi rose 2.4% to 2,369.16. Hong Kong’s Hang Seng rose 2% to 21,707.92, and the Shanghai Composite Index rose 1% to 3,354.63.
In Australia, the S&P/ASX 200 gained 0.8% to 6,577.40. Shares also rose in India and Taiwan.
US and European futures were also higher.
Market players are looking ahead to US inflation data expected next week. They seemed to shrug off preliminary data showing a slowdown in factory activity in several countries, including Japan.
Production manager surveys of “several developed economies came in lower than expected in both manufacturing and services, indicating broad moderation in economic activity,” IG’s Jun Rong Yeap said in a commentary.
A report from Friday showed that inflation in Japan remained at 2.1% in May, driven by energy costs and a weaker currency. However, underlying core inflation, which excludes volatile energy and fresh food costs, remained at 0.8%; according to analysts, the central bank is unlikely to follow the lead of the US Federal Reserve and other central banks in raising interest rates.
The Bank of Japan “isn’t convinced this will be sustainable as wage growth remains weak and higher energy costs weigh on corporate profits and consumer confidence,” Capital Economics’s Marcel Thieliant said in a report.
Trading was shaky on Wall Street as investors focused on another round of Congressional testimony by Federal Reserve Chairman Jerome Powell. He told a House committee that the Fed hopes to contain the worst inflation in four decades without plunging the economy into recession but acknowledged that “that path has become increasingly challenging.”
The S&P 500 ended 1% higher at 3,795.73 after falling 0.4%. The Dow Jones Industrial Average rose 0.6% to 30,677.36, and the Nasdaq gained 1.6% to 11,232.19.
Smaller company shares also gained ground. The Russell 2000 rose 1.3% to 1,711.67.
Trading has been turbulent recently as investors try to determine whether a recession is imminent. The benchmark S&P 500 is currently in a bear market. That means it is down more than 20% from its most recent high in January. The index has fallen 10 of the last 11 weeks.
On Thursday, Powell emphasized, “I don’t think a recession is inevitable.” He has said it is “definitely a possibility” and that amid the war in Ukraine, the central bank faces a more challenging task, essentially pushing oil and other commodity prices even higher and making inflation even more pervasive.
Powell spoke to Congress a week after the Fed raised its benchmark rate by three-quarters of a percentage point, the largest hike in nearly three decades. Fed policymakers are also forecasting a faster pace of rate hikes this year and next than they predicted three months ago, with a key rate of 3.8% by the end of 2023, which would be the highest level in 15 years.
The Labor Department reported Thursday that fewer Americans filed for unemployment benefits last week, although it was slightly more than economists had expected. The solid labor market is a relatively bright spot in a further weakening economy, with consumer confidence and retail sales showing increasing damage from inflation.
As higher prices stretch the wallet, consumers shift from big-ticket items like electronics to necessities. The pressure has been compounded by high petrol prices showing no signs of abating.
Major technology and healthcare companies did much of the heavy lifting. Microsoft was up 2.3%, and Johnson & Johnson was up 2.2%.
Energy stocks fell as the price of US crude fell 1.8%. Valero fell 7.6%.
Early Friday, the US crude oil benchmark rose 36 cents to $104.63 a barrel in electronic trading on the New York Mercantile Exchange. Brent oil, the basis for pricing for international trade, lost 9 cents to $106.55 a barrel.
Bond yields fell significantly. The 10-year Treasury yield, which helps determine mortgage rates, fell to 3.09% from 3.15% at the end of Wednesday.
The US dollar fell from 134.94 yen to 134.73 Japanese yen. The euro rose to $1.0539 from $1.0524.