- Asian shares rose following a rally on Wall Street driven by slow wage gains in the US.
- Technology shares in South Korea, Hong Kong, and Taiwan saw strong gains, and China's crackdown on internet companies is reportedly almost over.
- The US jobs report showed wage gains nationwide had risen 4.6% in December, though hiring across the job market may still be too strong for the Fed's liking.
Following a rally on Wall Street, where investors predict that slow wage gains in the US may indicate a cooling of inflation and potentially lead the Federal Reserve to halt its interest rate hike, shares in Asia have risen.
The gains were particularly evident in technology shares in South Korea, Hong Kong, and Taiwan, with Japan's markets closed for a holiday. In South Korea, the Kospi rose by 2.6% to 2,350.19, with Samsung Electronics, the country's largest company, seeing a gain of 2.9%. Taiwan's benchmark also saw an increase of 2.6%, and Bangkok's SET index added 0.8%.
In Australia, the S&P/ASX 200 advanced 0.6% to 7,151.30. In Hong Kong, the Hang Seng index gained 1.8% to 21,370.61, and the Shanghai Composite index added 0.6% to 3,176.08.
In addition, a Chinese financial news outlet has reported that China's two-year crackdown on internet companies is almost over, with the government set to support companies in the sector as they create more jobs and compete globally. As a result, shares in Alibaba and Tencent both saw significant increases, with Alibaba's Hong Kong-traded shares jumping 8.3% and Tencent's climbing 3.6%.
Markets worldwide received an initial boost on Friday from the US jobs report, which showed that wage gains nationwide had risen 4.6% in December from the previous year, though economists had expected a larger increase. However, the report also indicated that hiring across the job market may still be too strong for the Fed's liking, even after its series of rate hikes last year.
As a result, the S&P 500 rose 2.3% to 3,895.08, marking its first winning week in the last five. The Dow Jones Industrial Average gained 2.1% to 33,630.61, and the Nasdaq composite added 2.6%, closing at 10,569.29. Small-company stocks also saw an increase, with the Russell 2000 index rising 2.3% to 1,792.80.
Gains were widespread, with approximately 95% of stocks in the benchmark S&P 500 index closing higher. Technology companies were particularly successful, with chipmaker Nvidia rising 4.2%. However, analysts have warned that trading may remain volatile as investors try to predict whether the economy can avoid a recession, with much of the trading based on expectations for the Fed's actions with regard to interest rates.
Higher rates can slow the economy in an effort to combat inflation, but they also risk causing a recession and lowering prices for various investments. As a result, investors may continue to embrace weak data, especially if there are signs of decreasing wage inflation, as it could potentially lead to a softer landing that may be optimal for equities, according to Stephen Innes of SPI Asset Management.