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Asian stocks rise mostly in muted trading on bargain hunting

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TOKYO– Asian stocks were mostly higher on Friday after Wall Street benchmarks fell on fears the U.S. Federal Reserve could keep raising interest rates.

Markets rose in Japan, Australia, South Korea and China in muted trading. Oil prices have risen.

Hot readings in the U.S. jobs market on Thursday led traders to believe the Fed will need to continue inflicting pain on the economy to combat soaring prices. Inflation fell from a high of 9.1% in June to 7.1% in November and investors were hoping for signs that could prompt the Fed to ease the application of the brakes on the economy with interest rates. high interest. These hopes have been dashed so far.

Strong labor market reports set the stage for Friday’s release of the Labor Department’s December hiring snapshot.

“Global risk sentiment could tilt more towards the wait-and-see attitude ahead of the US jobs report later, lacking clear conviction in the direction of the Wall Street market over the past few days,” Yeap Jun Rong , a market analyst at IG, said in a report.

Japan’s benchmark Nikkei 225 rose 0.6% to end at 25,973.85. S from Australia&P/ASX 200 added 0.7% to 7,109.60. The South Korean Kospi gained 1.1% to 2,289.78. Hong Kong’s Hang Seng erased earlier gains, falling 0.1% to 21,024.36. The Shanghai Composite rose 0.1% to 3,159.72.

Analysts expect economic growth in Asia to slow this year, although China’s easing of COVID-19 restrictions should be a plus. Societe Generale analyst Suktae Oh expects the Bank of Korea to hike rates by 25 percentage points to 3.50% at its policy meeting next week.

“The data continues to point to weak economic activity and spike in inflation. Concerns about financial stability have persisted due to high corporate leverage and a weak housing market, which would be bearish for growth prospects,” he said.

Thursday, the S&P 500 fell 1.2% to 3,808.10. The Dow Jones fell 1% to 32,930.08. The Nasdaq slipped 1.5% to 10,305.24. The Russell 2000 Index fell 1.1% to 1,753.19.

Payroll company ADP reported a bigger-than-expected increase in jobs at private companies last month. The US government announced that the number of Americans applying for unemployment benefits fell to its lowest level in more than three months last week.

A government report on Wednesday showed a higher than expected number of job vacancies in November.

According to Brad McMillan, chief investment officer for Commonwealth Financial Network, the Department of Labor’s next snapshot of December hirings is a closely watched figure that is generally higher than expected following a robust jobs report from ADP.

“The real question for investors tomorrow will be whether the economy continues to grow faster than expected – and faster than the Fed wants – or will it remain in a more favorable position with continued moderate growth” , he wrote on Thursday. “The data suggests that the former .

A strong labor market is putting upward pressure on wages and reaffirming the central bank’s determination to keep interest rates high to slow economic growth and control inflation. The strategy, however, risks going too far and causing a recession.

The Fed’s benchmark lending rate is in a range of 4.25% to 4.5%, falling from near zero after seven increases last year. He forecast the rate to reach a range of 5% to 5.25% by the end of 2023 and he does not call for a rate cut until 2024.

Meanwhile, Wall Street is eagerly awaiting the latest round of corporate earnings to get a better idea of ​​how companies are handling inflation and weakening consumer demand. S companies&P 500 will ramp up the pace of reporting in a few weeks, but some results are already coming.

Energy stocks resisted the general market decline as the price of US crude oil rose 1.1%.

Benchmark U.S. crude added 58 cents to $74.25 a barrel in electronic trading on the New York Mercantile Exchange. Brent, the international price standard, rose 60 cents to $79.29 a barrel.

In currency trading, the US dollar climbed to 134.08 Japanese yen from 133.40 yen. The euro traded at $1.0520, little changed from $1.0524.

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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

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