Asian stocks rise following a decrease in rates on Wall Street

• Asian stocks rose on the back of expectations for a reduction in rates.
• The Federal Reserve has a likelihood of reducing rates in the near future.
• The Chinese market showed mixed growth, with Alibaba shares falling.

BANKING — Asian stocks and futures on U.S. stocks rose in the middle of the day after indices on Wall Street hinted at a decrease in expectations for short-term Federal Reserve rates.

The Tokyo index Nikkei 225 increased by 2% to 49,650.77, driven mainly by rising shares of large exporters and technology companies. In South Korea, the Kospi index also climbed by 2.1% to 3,940.15, supported by a 2.3% increase in Samsung Electronics shares.

Chinese markets showed modest growth. The Hong Kong Hang Seng index rose by 0.5% to 26,013.33, while the Shanghai Composite index increased by 0.1% to 3,875.48. However, shares of Chinese tech giant Alibaba fell by 1.1%, despite the company reporting stronger-than-expected earnings for the last quarter.

The Australian index S&P/ASX 200 rose by 0.9% to 8,615.30, and in New Zealand, the S&P/NZX 50 index increased by 0.7% following a reduction in the official interest rate by the central bank from 2.5% to 2.25%.

On Wall Street, the S&P 500 rose by 0.9% to 6,765.88, and the Dow Jones Industrial Average increased by 1.4% to 47,112.45.

The decrease in interest rates may particularly benefit smaller companies, as many of them require financing for growth. The Russell 2000 index, which includes the smallest U.S. stocks, rose by 2.1%.

Mixed economic data left traders with a 83% likelihood of a reduction in rates in the near term, according to CME Group data. Consumers in the U.S. purchased less from retailers in September than expected, and overall consumer confidence in the autumn has deteriorated more than anticipated.

The reduction in rates could stimulate the economy, encouraging households and companies to borrow more, while investors pay higher prices for investments.

Recent data in the U.S. showed higher April retail sales than previously reported, which had been held back by a six-week government shutdown. The Federal Reserve has already twice lowered rates this year in hopes of supporting the weakened labor market.

Several retailers reported stronger-than-expected earnings for the summer period. For instance, Abercrombie & Fitch shares rose by 37.5% after reporting a larger profit, while Kohl's shares increased by 42.5% following a report of profits, when analysts expected losses.

In commodity markets, the price of WTI crude rose by 24 cents to $58.19 per barrel, while the price of Brent crude increased by 26 cents to $62.06 per barrel.

The U.S. dollar weakened to 156.03 yen from 156.06 yen, while the euro rose to $1.1587 from $1.1569.

Tags: Economy