TOKYO (AP) — Asian shares rose Tuesday, partly on bargain-hunting from the recent global market falls amid continuing pessimism about the conronavirus pandemic.
Japan’s benchmark Nikkei 225 surged 2.1% in morning trading to 28,412.06. South Korea’s Kospi gained 1.1% to 3,169.67. Australia’s S&P/ASX 200 added 0.8% to 7,078.40. Hong Kong’s Hang Seng jumped 1.3% to 28,551.53, while the Shanghai Composite inched up nearly 0.1% to 3,519.58.
Regional markets shrugged off the latest gross domestic product data out of Japan, showing the world’s third largest economy contracted at an annualized rate of 5.1% in January-March, its worst pace since World War II. Analysts had expected the GDP results and don’t see the situation improving soon.
Yeap Jung Rong, market strategist at IG in Singapore, said Asian markets were seeking “to rebound from weakness over concerns on virus resurgences.” Although Asia has fared better in curbing infections and COVID-19 related deaths, compared to the U.S. and parts of Europe, worries have been growing about recent surges in coronavirus cases.
U.S. stocks slipped on Monday, tacking more losses onto last week’s stumble, as worries about inflation continue to dog Wall Street.
The S&P 500 dipped 10.56, or 0.3%, to 4,163.29, with tech stocks and other former market darlings once again taking the brunt of the losses. The benchmark index is coming off a 1.4% weekly drop from its record high, which would have been even worse if not for a late rebound.
The Dow Jones Industrial Average fell 54.34, or 0.2%, to 34,327.79, while the Nasdaq composite lost 50.93, or 0.4%, to 13,379.05.
Most stocks in the S&P 500 fell, but pockets of strength helped limit the damage. Energy stocks jumped as the price of crude oil rose, while producers of metals and other raw materials also climbed. The Russell 2000 index of smaller stocks inched up 2.49, or 0.1%, to 2,227.12.
They’re the latest back-and-forth eddies for a market swept up in worries about whether rising inflation will prove to be temporary or will last, as well as enthusiasm about a recovering economy. Prices are rising for everything from auto insurance to restaurant meals as the economy leaps out of last year’s pandemic-induced coma.
If inflation sticks around, the fear is that the Federal Reserve will have to dial back the extensive support it’s providing to markets. That includes record-low interest rates and the monthly purchase of $120 billion in bonds meant to goose the job market and economy.
Higher interest rates drag on most of the stock market, but they hit particularly hard on stocks seen as the most expensive and those bid up for profits expected far in the future.
That has put extra pressure on tech stocks and companies promising the allure of big growth, which have been leading the market for years. Apple, Microsoft and Tesla were three of the heaviest weights on the S&P 500 Monday, falling between 0.9% and 2.2%.
In recent weeks, blowout profit reports from tech titans and much of the rest of corporate America have helped validate the huge run stocks have been on for more than a year. The economy continues to strengthen as COVID-19 vaccinations roll out, and the S&P 500 roared to an 11.3% gain in the first four months of the year. That’s a bigger gain than the market has had in half of the last 20 full years.
“History says whenever we’ve had such a strong start to the year we tend to take a break and digest some of those gains,” said Sam Stovall, chief investment strategist at CFRA. “In many ways this is fairly natural.”
For all the worries about inflation, many professional investors are echoing the Federal Reserve in saying that they expect rising prices to remain only “transitory.” Many analysts along Wall Street also expect the strong profit growth for companies to continue through the year as the economy and job market improve. That should help to support stock prices, though it may not give a big further boost after shares surged last year when profits cratered.
In energy trading, benchmark U.S. crude added 21 cents to $66.48 a barrel. Brent crude, the international standard, rose 25 cents to $69.71 a barrel.
In currency trading, the U.S. dollar edged down to 109.15 Japanese yen from 109.27 yen. The euro cost $1.2166, up from $1.2150.
___
AP Business Writers Damian J. Troise and Stan Choe contributed.
Copyright © 2021 . All rights reserved. This website is not intended for users located within the European Economic Area.
