Asian Shares Mostly Higher After Further Gains On Wall Street

Asian shares were mostly higher on Friday after another day of gains on Wall Street amid a deluge of news about the economy, interest rates and corporate profits.

Tokyo, Hong Kong and Sydney advanced while Seoul and Shanghai declined. US futures edged lower while oil prices rose.

Japan reported its inflation rose at a slower pace in June, with food prices growing 6.5 per cent year-on-year compared to 12.3 per cent in May and the increase in energy costs falling to 16.5 per cent from 20.8 per cent.

Core inflation excluding volatile energy and food prices rose to 2.6 per cent from 2.2 per cent the month before.

The Bank of Japan has indicated that unlike the Federal Reserve and other central banks, however, it does not intend to raise its minus 0.1 per cent benchmark interest rate to counter the trend given that wages are not rising in tandem with prices, constraining consumer demand.

A preliminary reading on factory activity for Japan showed output and new orders contracting to their worst levels in months. Companies blamed shortages of raw materials and rising costs.

Tokyo's Nikkei 225 index gained 0.4 per cent to 27,924.97 while the Hang Seng in Hong Kong edged 0.1 per cent higher, to 20,598.98. Australia's S and P/ASX 200 added 0.2 per cent to 6,807.10.

In South Korea, the Kospi declined 0.3 per cent to 2,402.72. The Shanghai Composite index lost 0.3 per cent to 3,261.12.

Much of the focus this week has been on Europe. The European Central Bank opted, as expected, to raise its key interest rate on Thursday, ending a years-long experiment with negative interest rates. It was its first increase in 11 years.

A key pipeline carrying Russian natural gas into the region reopened, though at 40 per cent of capacity as worries persisted that Moscow may restrict supplies to punish allies of Ukraine.

In Italy, Premier Mario Draghi resigned after his ruling coalition fell apart. That adds more uncertainty as Europe contends with the war in Ukraine, high inflation and the potential for trouble in Europe's bond markets.

On Wall Street, the S and P 500 climbed 1 per cent to 3,998.95 on Thursday, returning to its highest level in six weeks. The Dow rose 0.5 per cent to 32,036.90 and the Nasdaq rose 1.4 per cent to 12,059.61.

The Russell 2000 gained 0.5 per cent, at 1,836.69.

Stocks briefly lost ground after President Joe Biden tested positive for COVID.

The Federal Reserve is set to raise rates next week for a fourth time this year, once again trying to tamp down high inflation without pulling the economy into a recession.

Some parts of the US economy already have begun to soften.

The number of workers who filed for unemployment benefits last week was the highest in eight months, though it remains relatively low. A separate report released on Thursday showed manufacturing in the mid-Atlantic region weakened much more than economists had expected.

Strong profits from big US companies have driven gains on Wall Street this week.

Tesla climbed 9.8 per cent in the first trading after the electric-vehicle maker reported results for the spring that were better than analysts expected. It was the biggest gainer in the S and P 500.

Steelmaker Nucor jumped 9.1 per cent after its results topped forecasts. Philip Morris International, the tobacco company, rose 4.2 per cent after reporting stronger profit than expected.

United Airlines tumbled 10.2 per cent after its profit and revenue fell short of expectations. It also scaled back its plans for growth later this year. American Airlines fell 7.4 per cent after it reported weaker earnings than expected, though its revenue topped forecasts.

AT and T sank 7.6 per cent even though it reported better profit and revenue than Wall Street forecast. It cut its forecast for the amount of cash it will generate this year.

Stocks of energy companies also fell as the price of US crude oil settled 3.5 per cent lower.

Early on Friday, US benchmark crude oil was up 85 cents at USD 97.20 per barrel in electronic trading on the New York Mercantile Exchange.

Brent crude, the pricing basis for international trading, advanced 75 cents to USD 100.23 per barrel.

In currency trading, the US dollar bought 137.77 Japanese yen, up from 137.41 late on Thursday. The euro slipped to USD 1.0184 from USD 1.0230.