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Stocks rise on earnings reports, US data in focus

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Investors are gearing up for the release of some major US data this week, with the standout being the PCE index

Asian equities extended the week’s gains on Wednesday after a strong rally on Wall Street and another record in London, as traders cheered more upbeat earnings reports and data suggesting a slowdown in US economic activity.

Analysts also said a recent pullback in markets provided an opportunity to step back in, while fading Middle East tensions were also providing much-needed support.

All three main indexes in New York experienced a rise on Tuesday, with the Nasdaq and S&P 500 each rising more than 1%.

General Electric, Spotify, and diaper and paper product brand Kimberly-Clark were among the firms posting strong gains after releasing quarterly reports.

Microsoft and Alphabet are among the other top companies set to announce their results this week.

Hopes for a strong batch of earnings – especially from the key tech giants – has been a key driver of the rally in stocks, helping to offset disappointment that the Fed will not trim interest rates as much as hoped this year, if at all.

Investors are also gearing up for the release of some major US data this week, with the standout being the PCE index – the Federal Reserve’s preferred measure of inflation.

That figure follows three consecutive months of forecast-topping consumer price figures that have forced investors to cut down their outlook for how many reductions the central bank will make – from six at the beginning 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.

Nevertheless, figures Tuesday from S&P Global showing that economic activity slowed in April provided hope for Fed cuts.

Chris Williamson, at S&P Global Market Intelligence, said: The more challenging business environment prompted firms to cut payroll numbers at a rate not seen since the global financial crisis if the early pandemic lockdown months are excluded.

Asia continued the week’s rally, with Tokyo and Taipei more than 2% higher, while Hong Kong, Seoul and Manila were up more than 1%.

Shanghai, Sydney, Singapore, Wellington and Jakarta were also well in the green.

Oil prices were barely moved after climbing more than 1% on Tuesday on a report pointing to another build in US inventories that raised questions about demand in the world’s top economy.

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