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Asian shares rise, watch Wall St gains as earnings rise

BANGKOK (AP) — Stocks rose in Asia on Tuesday after a tech-led rally on Wall Street as investors bet the Federal Reserve will scale back interest rate hikes to curb inflation.

Many markets in the region were closed for the Lunar New Year holidays.

Preliminary data on Japanese manufacturing held steady in January at its lowest level in more than two years, with exports falling faster. But strength in technology stocks helped spur buying in manufacturers such as electronics maker Omron, which gained 2.7 percent, and robot supplier Fanuc Corp., which gained 2 percent.

Tokyo’s Nikkei 225 rose 1.5 percent to 27,299.19 and Mumbai’s Sensex added 0.2 percent to 61,065.17. Australia’s S&P/ASX 200 rose 0.4% to 7,490.40, while the Bangkok SET rose 0.3%.
“Markets are positioned to grow as investors feel more comfortable with the idea of ​​an improving macro backdrop ahead of a busy week of data from both a macro and micro perspective,” Stephen Innes of SPI Asset Management said in a commentary.
“And if one looks under the hood, at the height of the moment, there is that unmistakable sense of pandemic-era trading, supported by steady moves in mega-cap tech stocks,” he said.
On Monday, the S&P 500 rose 1.2% to 4,019.81 points. The Dow Jones Industrial Average rose 0.8 percent to 33,629.56 and the Nasdaq technology composite closed 2 percent higher at 11,364.41. Small-cap stocks also rose, pushing the Russell 2000 up 1.3 percent to 1,890.77.
Tech stocks in the S&P 500 rose 2.3% on Monday, with chip maker Advanced Micro Devices leading the pack with a 9.2% gain.
Markets are swinging between hope and caution as investors watch whether the Federal Reserve will hold back on interest rate hikes designed to tame inflation, which has begun to ease in many countries in recent months. The fear is that the Fed and other central banks may go too far, sending the US and other economies into recession by slowing spending and investment too much.
The Federal Reserve has already raised its key overnight interest rate to a range of 4.25% to 4.5% from near zero early last year, and traders are now betting on an almost 99% chance the Fed will raise rates by just a quarter point in February 1 , according to CME Group.
The yield on two-year Treasuries, which tends to track expectations for a Fed move, rose to 4.22 percent from 4.18 percent late Friday. The 10-year yield, which helps determine rates on mortgages and other major loans, rose to 3.52 percent from 3.48 percent.
Another partisan battle in Washington over the nation’s ability to borrow could roil markets if Democrats and Republicans can’t agree to allow the U.S. government to borrow more.
Corporate earnings are seen as a good indicator of how well companies are coping with a slowing economy and higher costs. Earnings are one of the main levers that determine stock prices.

This week, more than seven dozen companies in the S&P 500 will report results for the final three months of 2022. That includes headliners like Microsoft on Tuesday and Tesla on Wednesday.
Such big tech-driven companies have begun layoffs to cut costs after admitting they misunderstood the boom stemming from the pandemic and grew too fast. Spotify said on Monday it would cut 6% of its workforce, and its shares rose 2.1%.
Big tech stocks have a lot of influence on Wall Street because they are some of the most valuable in the market. After riding through the pandemic thanks to super-low interest rates and a surge in demand from customers who suddenly went home, they have struggled over the past year as the Fed has sharply raised rates.
In other trading Tuesday, benchmark U.S. crude lost 9 cents to $81.53 a barrel in electronic trading on the New York Mercantile Exchange. It lost 2 cents to $81.62 on Monday.
Brent crude, the price benchmark for international trade, lost 27 cents to $87.89 a barrel.
The dollar fell to 130.16 Japanese yen from 130.66 yen. The euro rose to $1.0884 from $1.0875.