BANGKOK (AP) — Stocks were higher in Asia on Tuesday after a tech-led rally on Wall Street as investors bet the Federal Reserve will trim its rate hikes to tamp down inflation.
Many markets in the region were closed for Lunar New Year holidays.
A preliminary reading for manufacturing in Japan remained steady in January at its lowest level in over two years, with exports declining faster. But the strength in technology shares helped spur buying of manufacturers like electronics maker Omron, which gained 2.7%, and robot supplier Fanuc Corp., which gained 2%.
Tokyo’s Nikkei 225 index gained 1.7% to 27,367.03 and the Sensex in Mumbai added 0.5% to 61,223.88. Australia’s S&P/ASX 200 rose 0.4% to 7,486.60 while the SET in Bangkok was up 0.2%.
“Markets are assuming a pro-growth stance as investors get more comfortable with the idea of an improving macro backdrop ahead of a busy week of data from both a macro and micro perspective,” Stephen Innes of SPI Asset Management said in a commentary.
“And if one takes a look under the hood, in the heat of the moment, it has that unmistakable feel of pandemic-era trading, supported by solid moves in mega cap tech stocks,” he said.
On Monday, the S&P 500 rose 1.2% to 4,019.81. The Dow Jones Industrial Average rose 0.8% to 33,629.56 and the tech-heavy Nasdaq composite closed 2% higher, at 11,364.41. Small company stocks also rose, pushing the Russell 2000 index up 1.3% to 1,890.77.
Tech stocks in the S&P 500 rose 2.3% Monday, with chipmaker Advanced Micro Devices leading the pack with a 9.2% gain.
Markets have been swinging between hope and caution as investors watch to see if the Federal Reserve will dial back on interest rate hikes meant to tame inflation, which has begun to abate in many countries in recent months. The fear is that the Fed and other central banks might go too far, tipping the U.S. and other economies into recession by slowing spending and investment too much.
The Fed has already pulled its key overnight rate up to a range of 4.25% to 4.5% from virtually zero early last year, and traders are now betting on a nearly 99% probability that the Fed will raise rates by just a quarter point on Feb. 1, according to CME Group.
The yield on the two-year Treasury, which tends to track expectations for Fed movement, rose to 4.22% from 4.18% late Friday. The 10-year yield, which helps set rates for mortgages and other important loans, rose to 3.52% from 3.48%.
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