Asian Shares Rally as Oil Prices Ease and Wall Street Recovers
South Korea's Kospi index surged 2.3% on Friday, leading a broad advance in Asian equities. This gain followed a strong session in the United States and a drop in global crude oil prices. The move reversed much of the previous day's losses across major markets.
South Korea's Kospi index jumped 2.3% to 6,866.83 in early Friday trading. This was the largest gain among major Asian benchmarks. The rally followed a recovery in US markets and a decline in crude oil prices. Investors reacted to easing pressure from the bond market.
Japan's Nikkei 225 rose 1.9% to 65,332.57. The Bank of Japan raised its benchmark rate to 1.25%, a 31-year high. This move was widely expected after the Federal Reserve also hiked rates. The US dollar strengthened to 157.11 yen from 155.95 yen. Recent joint interventions to support the yen had limited effect.
Oil prices drop from weekly highs
Brent crude fell 0.94% to $103.83 per barrel. US benchmark crude slid 0.83% to $101.06 per barrel. Prices had reached nearly $110 earlier in the week. Concerns about the war in Iran had previously kept supply tight. The recent drop helped lower bond yields.
The yield on the 10-year US Treasury fell to 4.93% from 5.01%. This reduction in rates removed some pressure on equity valuations. Brent is still well above the $72 per barrel seen earlier this summer. The decline provided a boost to risk assets in Asia.
Wall Street rebounds after Fed hike
The S&P 500 gained 1.1% to 7,637.76. This marked only its second rise in the last nine days. The Dow Jones Industrial Average added 316.14 points to 51,778.04. The Nasdaq composite climbed 1.7% to 26,418.30. Stocks recovered from sharp intraday losses following the Federal Reserve announcement.
The Federal Reserve raised the federal funds rate by 0.25% on Wednesday. This was its first hike in over three years. Officials signaled they may raise rates one more time this year. The goal is to bring inflation back to the 2% target. Higher rates generally reduce the present value of future corporate earnings.
Mixed signals from central banks
The rate hikes built confidence that central banks are controlling inflation. However, higher rates also make borrowing more expensive for companies. This dynamic created volatility in US trading earlier in the week. Asian markets responded positively to the subsequent stabilization. The Hang Seng index rose 0.7% to 24,769.80. The Shanghai Composite added 1.0% to 3,916.08.
Australia's S&P/ASX 200 slipped less than 0.1% to 8,731.50. The broad advance in Asia was driven by the US rally and cheaper energy. Traders are monitoring further moves in the yen and oil. The source for these market updates is GN auto markets/energy: crude oil prices. The data reflects early Friday trading sessions.
