BANGKOK โ Asian stocks have risen after Wall Street advanced on potentially encouraging news about interest rates, which have been dragging markets lower since the summer.
US futures rose while oil prices fell slightly after rising on Monday following Israel's declaration of war on Hamas following its Surprise attack from the Gaza Strip.
Tokyo's Nikkei 225 gained 2.2% to 31,682.71 and Hong Kong's Hang Seng gained 1.3% to 17,740.49.
In Australia, the S&P/ASX 200 rose 1.2% to 7,053.80. South Korea's Kospi added 0.4% to 2,419.77. In Bangkok, the SET gained 0.5%.
On Monday, the S&P 500 gained 0.6% to 4,335.66, turning from losses to gains after two Federal Reserve officials They suggested that interest rates could remain steady at their next monetary policy meeting because a rise in longer-dated bond yields could be helping to cool inflation without more Federal Reserve hikes shaking markets.
The Dow Jones Industrial Average gained 0.6% to 33,604.65 and the Nasdaq composite rose 0.4% to 13,484.24.
Oil prices, which had risen on Monday on concerns about violence in the Middle East, fell.
The area embroiled in conflict does not host significant oil production, but fears that the fighting could affect the crude market caused a barrel of US oil to rise $3.59 to $86.38. Brent crude, the international standard, rose $3.57 to $88.15 a barrel.
Earlier Tuesday, benchmark U.S. crude oil fell 34 cents to $86.04 a barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, the international standard, lost 30 cents to $87.85 a barrel.
One possible outcome of the violence is a slowdown in Iranian oil exports, which have been growing this year, according to Amarpreet Singh, an energy analyst at Barclays. A lower supply of crude oil would raise its price, other things being equal.
The conflict could also harm the possibility of improving relations between Israel and Saudi Arabia, which is the world's second-largest oil producer.
Oil prices were already volatile. A barrel of US crude had jumped from below $70 over the summer to above $90 last week, increasing pressure on inflation and the broader economy. It retreated sharply last week before jumping again after fighting began in Israel.
Monday's rise in crude oil helped oil and gas stocks achieve some of the biggest gains on Wall Street. Marathon Oil rose 6.6% and Halliburton rose 6.8%.
Stocks of defense contractors that make weapons were also particularly strong. Northrop Grumman surged 11.4% and L3Harris Technologies gained 10%.
At the opposite extreme were companies that consider fuel one of their biggest expenses. United Airlines sank 4.9% and Carnival fell 4.3%.
But it's interest rates and expectations about where they'll go that have been driving Wall Street's swings more than anything since early last year.
Wall Street hates higher interest rates because they drive down the prices of stocks and other investments. They also make debt more expensive for all types of companies and households, which slows down the economy.
The 10-year yield fell to 4.64% after rising to 4.80%, down from 3.50% over the summer and from just 0.50% early in the pandemic. Trading in the US Treasury market was closed on Monday for a holiday.
This week's reports on inflation at both the consumer and wholesale levels are the next big data to be released before the Federal Reserve makes its next interest rate announcement on November 1.
Next week will also mark the unofficial start of the S&P 500 earnings reporting season, with Delta Air Lines, JPMorgan Chase and UnitedHealth Group among the big companies scheduled on the calendar.
In Israel, the country's central bank said Monday it will sell up to $30 billion in foreign currency to shore up the shekel, whose value plummeted after violence began. It also said it will provide up to $15 billion to support market liquidity.
The shekel fell 2.3% against the US dollar and returned to the level it was in 2016.
The dollar rose to 148.65 Japanese yen from 148.51 yen late Monday. The euro was unchanged at $1.0568.
In addition to the US dollar, another investment that typically performs well in times of stress also rose. Gold rose $11.50 to $1,875.80 an ounce. On Monday, it added $19.10 to $1,864.30 an ounce.
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AP Business Writers Matt Ott and Elaine Kurtenbach and AP Writer Jon Gambrell contributed.
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