Asia shares rise after strong finish on Wall Streetwritten by Bella Palmer
Nikkei 225 gained 0.3% to 29,120.12, the Hang Seng edged less than 0.1% higher to 29,093.33, the Kospi climbed 0.8% to 3,209.85, the Shanghai Composite index added 0.2% to 3,480.68
Shares opened higher in Asia on Monday following a strong finish last week on Wall Street.
Tokyo, Hong Kong, Seoul and Shanghai all started out with modest gains and U.S. futures also inched up.
Stocks jumped Friday in New York, though the S&P 500 still finished with its first weekly loss in the last five. Technology stocks and banks led much of the gains, while investors focused on lacklustre company earnings from big names like Intel, American Express and Honeywell.
So far, Asian markets have taken in stride recent setbacks in vanquishing the pandemic as infections have come roaring back in Japan, Thailand and India, among other countries.
Government precautions to battle surging outbreaks point to an uneven global recovery, economists say. That's especially true for tourism, an important industry for many parts of the region.
Tokyo's Nikkei 225 gained 0.3% to 29,120.12 and the Hang Seng in Hong Kong edged less than 0.1% higher to 29,093.33. In Seoul, the Kospi climbed 0.8% to 3,209.85. The Shanghai Composite index added 0.2% to 3,480.68, while Australia's S&P/ASX 200 edged 3 points lower to 7,057.00. Shares fell in Jakarta but rose in Taiwan and Singapore.
On Friday, the benchmark S&P 500 advanced 1.1% to 4,180.17. The Dow Jones Industrial Average added 0.7% to 34,043.49. The tech-heavy Nasdaq jumped 1.4% to 14,016.81, while the Russell 2000 index of small caps added 1.8% to 2,271.86.
Corporate earnings have been mostly positive, but investors are weighing economic growth against threats from the pandemic and worries about changes in tax policy.
Banks made solid gains as bond yields ticked higher. That allows them to charge more lucrative interest on loans. The yield on the 10-year Treasury rose to 1.57% from 1.56% late Friday.
Wall Street has been in rally mode in recent weeks as the rollout of COVID-19 vaccinations, the massive support from the U.S. government and Federal Reserve, and a string of encouraging economic data fuel expectations for a stronger economy and solid corporate profit growth this year.
About a quarter of S&P 500 companies have reported quarterly results so far this earnings season. Of these, 84% have delivered earnings that topped Wall Street’s estimates, according to FactSet.
This week is another busy one for earnings, with 181 S&P 500 companies, including Tesla, Starbucks, Microsoft and Amazon.com, set to report results.
Investors are also weighing the implications of President Joe Biden’s plans to introduce higher capital gains taxes to help pay for the increased government spending to help the economy recover from the pandemic. Bloomberg News reported the pending proposal Thursday afternoon, citing unidentified sources.
Higher taxes on capital gains would make stocks marginally more expensive in the long term, which might impact the market’s overall valuation. Despite millions of Americans having their retirement funds in the stock and bond markets, most stocks are owned by the rich.
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