BEIJING (AP) – Most Asian stock markets rose Tuesday after U.S. benchmarks hit new highs and Federal Reserve chair Janet Yellen said the U.S. central bank could raise interest rates as soon as next month.
KEEPING SCORE: Tokyo’s Nikkei 225 index rose 1 percent to 19,437.98 and Hong Kong’s Hang Seng jumped 1.1 percent to 24,961.29. Sydney’s S&P-ASX 200 gained 0.9 percent to 5,809.10. Seoul’s Kospi added 0.5 percent to 2,083.86. The Shanghai Composite Index slipped 0.2 percent to 3,208.31. Benchmarks in New Zealand and Taiwan rose, while Southeast Asian markets declined.
WALL STREET: U.S. stock indexes hit new highs, boosted by bank stocks on hopes of bigger profits ahead. General Motors jumped 4.8 percent following news that France’s PSA Group, maker of Peugeot and Citroen cars, is exploring a deal to buy Opel, GM’s money-losing European business. Cynosure, which makes devices used in laser body contouring, hair removal and skin care, soared after agreeing to be bought by medical device maker Hologic for $1.57 billion. The Standard & Poor’s 500 index rose 0.4 percent to 2,337.58 for its sixth straight day of gains. The Dow Jones industrial average rose 0.5 percent to 20,504.41. The Nasdaq composite rose 0.3 percent to 5,782.57.
FED WATCH: Yellen told a Senate committee the central bank could raise interest rates as soon as next month. Bond yields jumped and fed through to shares of banks, which can benefit from higher rates by charging more for loans. Yellen said little to alter most investors’ expectations. The Fed raised interest rates in December for just the second time in a decade, and Yellen said the strengthening job market and a modest move higher in inflation should warrant continued, gradual increases.
ANALYST’S TAKE: Yellen’s comments were “the main catalyst for overnight markets, evidently surprising on the hawkish side,” said Jingyi Pan of IG in a report. “While the market had expected a strong rhetoric on improving economic conditions, the push to hasten the next rate hike had been unexpected.” Based on history, markets put the likelihood of a policy change out of the Fed’s March meeting at 34 percent, Pan said, “but that had not stopped the U.S. dollar and equity markets from ticking up.”