Stocks strengthen

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Asian shares tracked solid Wall Street performance on Wednesday as strong overnight earnings for US retail giants pointed to further scope for the Federal Reserve to tackle inflation with rate hikes.

Japan’s Nikkei rose 0.81 percent to 29,101.33, breaking through the 29,000 barrier for the first time since Jan. 6.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.02 percent.

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Stocks in New Zealand .NZ50 fell 0.285 percent and the kiwi dollar gained 0.35 percent after the country’s central bank announced a fourth consecutive 50 bps rate hike to 3.00 percent.

Despite the hike being in line with expectations, the announcement was described as “definitely more hawkish than expected” by ImreSpeizer, head of NZ market strategy at Westpac, who pointed to the tone of the RBNZ’s statement and a 15 bps raise in the official cash rate (OCR) track to 4.10 percent.

“Clearly they’re a bit more worried about wage inflation and a very tight labour market, that’s been a big recent development,” Speizer said.

Australia’s AXJO index fell 0.14 percent and the Aussie dollar reached a new one-week low after Q2 wages data showed growth slightly below expectations.

Hong Kong’s Hang Seng index rose 0.2 percent, while Chinese blue chips were down 0.3 percent.

Overnight, the Dow Jones Industrial Average gained 0.71 percent and the S&P 500 gained 0.19 percent as Home Depot posted higher than expected sales and Walmart increased its profit forecast.

S&P emini futures were flat in early Asian trading hours.

Investors now see a 41 percent chance of a third successive 75 bps rate hike at the Fed’s next meeting in September, up from 39 percent the previous day. Minutes from the previous meeting will be released later today. — Reuters

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