Asian shares up, extending Wall St gains as US wages slow

BANGKOK (AP) — Shares have climbed in Asia following a rally on Wall Street, where investors bet that slow U.S. wage gains may augur a cooling of the inflation that has led the Federal Reserve to hike interest rates.

Gains in technology shares boosted benchmarks in South Korea, Hong Kong and Taiwan. Japan’s markets were closed for a holiday.

A Chinese financial news outlet cited a top central bank official as saying that China’s more than two-year crackdown on internet companies is nearly finished.

Caixin quoted Guo Shuqing, the Communist Party secretary of the People’s Bank of China as saying the government would support companies in the sector in creating more jobs and competing globally.

E-commerce giant Alibaba’s shares jumped 7.9% and technology and entertainment company Tencent’s climbed 2.6%.

Hong Kong’s Hang Seng index gained 1.6% to 21,328.41 while the Shanghai Composite index added 0.5% to 3,174.33.

In South Korea, the Kospi added 2.5% to 2,347.07 while Samsung Electronics, the country’s biggest company gained 2.5%. Taiwan’s benchmark climbed 2.2% and Bangkok’s SET index added 0.9%.

In Australia, the S&P/ASX 200 advanced 0.6% to 7,154.70.

Markets worldwide got an initial jolt Friday from the U.S. jobs report. It showed workers’ wage gains are slowing, which could ease pressure on inflation, but it also showed hiring across the job market may still be too strong for the Fed’s liking, even after its fusillade of rate hikes last year.

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. The Nasdaq composite added 2.6%, closing at 10,569.29. Small-company stocks also rose, lifting the Russell 2000 index 2.3% to 1,792.80.

Gains were widespread, with about 95% of the stocks in the benchmark S&P 500 index closing higher. Technology companies powered much of the rally. Chipmaker Nvidia rose 4.2%.

Analysts warned trading may remain turbulent as investors keep trying to handicap whether the economy can avoid a recession. Much of the trading is based entirely on expectations for what the Fed will do with rates: High rates slow the economy by design, seeking to grind down inflation, but they risk causing a recession and dragging down prices for all kinds of investments.

Amid the ups and downs, “investors may continue to embrace weak data, especially if signs of descending wage inflation continue,” Stephen Innes of SPI Asset Management said in a commentary. “Any indications in the data that the Fed could tap the brakes on its monetary tightening cycle could boost calls for a softer landing that may be optimal for equities.”

The jobs report showed wages nationwide rose 4.6% in December from a year earlier in the smallest increase since two summers ago. Economists had expected wage gains to pick up.

A separate report showed that service industry activity in the U.S. contracted last month, the first time that’s happened since 2020.

The Fed has pulled its key overnight rate up to a range of 4.25% to 4.50% after it began last year at virtually zero. With inflation showing some signs of cooling in recent months, it trimmed its latest rate increase to 0.50 percentage points after four straight hikes of 0.75 points. Traders are largely betting on the Fed to move to the more traditional hike of 0.25 points at its meeting next month.

Past rate hikes have already inflicted pain in areas of the economy that do best when rates are low, such as housing.

In coming weeks, companies across industries will show how widespread the damage is when they report how much profit they made during the last three months of 2022.

If companies across the S&P 500 report a drop in overall earnings per share, as some analysts suspect, it would be the first decline since the summer of 2020.

In other trading, U.S. benchmark crude oil added 97 cents to $74.74 per barrel in electronic trading on the New York Mercantile Exchange. It added 10 cents to $73.77 per barrel on Friday.

Brent crude, the international pricing standard, picked up 96 cents to $79.53 per barrel.

The U.S. dollar slipped to 131.81 Japanese yen from 132.05 yen. The euro rose to $1.0676 from $1.0643.