TOKYO (AP) — Asian shares were mostly higher Friday, after U.S. stocks climbed to records, with easier interest rates beckoning on the horizon.
Japan's benchmark Nikkei 225 added 0.7% in morning trading to 39,874.68. Sydney's S&P/ASX 200 jumped 0.9% to 7,829.60. South Korea's Kospi surged 1.4% to 2,683.76. Hong Kong's Hang Seng rose nearly 1.1% to 16,400.38, while the Shanghai Composite slipped 0.1% to 3,023.74.
Although economic data from the region, such as China, remained relatively positive, investors stayed cautious. Higher interest rates could be in store, for instance, in Japan, once the economy picks up.
“This was driven by reports of (Bank of Japan) officials being more confident of wage growth as labor cash earnings outperformed,” said Tan Boon Heng at Mizuho Bank in Singapore.
On Wall Street, the S&P 500 rallied 1% to set its 16th all-time high so far this year. It’s been on a terrific run and is on track for its 17th winning week in the last 19 after erasing the last of its losses from Monday and Tuesday.
The Dow Jones Industrial Average added 130 points, or 0.3%, and the Nasdaq composite jumped 1.5% to finish just shy of its record.
Federal Reserve Chair Jerome Powell said in testimony on Capitol Hill that the central bank is “not far” from delivering the cuts to interest rates that Wall Street craves so much. He said again that the Fed is just waiting for additional data to confirm inflation is cooling.
It’s a key point on Wall Street because cuts to rates would release pressure on the economy and the financial system, while goosing investment prices. After shelving earlier hopes for cuts to begin in March, traders now see June as the likeliest starting point. The Fed's main interest rate is at its highest level since 2001.
After getting criticism for waiting too long before raising interest rates when inflation was accelerating, Powell faced questions from the Senate's banking committee about the possibility that it could be too late in cutting rates. That would cause undue pain because high rates slow the economy.
“We’re well aware of that risk, of course,” Powell said.
He said if conditions continue as expected, including a strong job market and cooling inflation, cuts will come later this year. Cutting rates too early could risk a reacceleration of inflation.
Treasury yields eased in the bond market after a couple reports gave potential signals of lessened pressure on inflation.
The yield on the 10-year Treasury dipped to 4.08% from 4.11% late Wednesday. It’s been generally falling since topping 5% last autumn, which can encourage borrowing across the economy and investors to pay higher prices for stocks. The two-year Treasury yield, which moves more closely with expectations for the Fed, fell by more.
Across the Atlantic, traders were also trying to guess when the European Central Bank will begin cutting interest rates after its president said it’s making progress on getting inflation under control.
One report said slightly more U.S. workers applied for unemployment benefits last week than expected, though the number remains low relative to history.
A potentially more impactful report will arrive Friday morning, when the U.S. government will give its latest monthly update on the job market. The hope among traders is that the job market remains healthy but not so much that it deters the Federal Reserve from cutting interest rates.
On Wall Street, Nvidia was again the strongest force lifting the S&P 500 upward and climbed 4.5%. It has soared 87% this year after more than tripling last year amid Wall Street's frenzy around artificial-intelligence technology.
All told, the S&P 500 rose 52.60 points to 5,157.36. The Dow gained 130.30 to 38,791.35, and the Nasdaq composite climbed 241.83 to 16,273.38.
In energy trading, benchmark U.S. crude rose 37 cents to $79.30 a barrel. Brent crude, the international standard, gained 29 cents to $83.25 a barrel.
In currency trading, the U.S. dollar inched up to 147.97 Japanese yen from 147.90 yen. The euro cost $1.0953, little changed from $1.0951.