HONG KONG, China — Asian equities extended the week’s gains Wednesday following a strong rally on Wall Street and another record in London, as traders cheered more upbeat earnings reports and data indicating a slowdown in US economic activity.
Analysts also said a recent pullback in markets provided an opportunity to step back in, while easing Middle East tensions was also providing much-needed support.
All three main indexes in New York enjoyed a bump Tuesday, with the Nasdaq and S&P 500 each piling on more than one percent.
General Electric, Spotify, and diaper and paper product brand Kimberly-Clark were among the companies posting strong gains after releasing quarterly reports.
Microsoft and Alphabet are among the other top firms set to announce their results this week.
Electric car giant Tesla announced late Tuesday a big profit miss but said it would speed up the launch of cheaper vehicles, which saw its share price soar in after-hours trade.
READ: Tesla Q1 profit falls 55%, but stock jumps as firm steps up production
Hopes for a strong batch of earnings — particularly from the crucial tech titans — have been a key driver of the rally in stocks, helping to offset disappointment that the Federal Reserve will not cut interest rates as much as hoped this year, if at all.
U.S. economic data
Investors are also gearing up for the release of some major US data this week, with the standout being the personal consumption expenditures (PCE) index — the Fed’s preferred gauge of inflation.
That reading follows three straight months of forecast-topping consumer price figures that have forced investors to whittle down their outlook for how many cuts the central bank will make — from six at the start of the year to two at most now.
A persistently strong jobs market has also raised questions about how low borrowing costs will be by 2025.
However, figures Tuesday from S&P Global showing that economic activity slowed in April provided a sliver of optimism for Fed cuts.
Chris Williamson, at S&P Global Market Intelligence, said: “The more challenging business environment prompted companies to cut payroll numbers at a rate not seen since the global financial crisis if the early pandemic lockdown months are excluded.”
READ: Asian stocks track Wall Street gains ahead of earnings reports
Asia continued the week’s rally, with Tokyo and Taipei up more than 2 percent, while Hong Kong, Seoul, and Manila were more than 1 percent higher.
Shanghai, Sydney, Singapore, Wellington, and Jakarta were also well in the green.
Observers said traders were moving back into the markets as they looked to take advantage of the recent pullback to pick up bargains.
Oil prices were barely moved after jumping more than one percent Tuesday on a report pointing to another build in US inventories that raised questions about demand in the world’s top economy.
That comes as OPEC and other key producers stick to their output cuts, while investors were also eyeing Washington’s moves to punish Iran for its attack on Israel earlier this month.