BANGKOK (AP) — Stocks were higher in Asia on Tuesday after a tech-led rally on Wall Street as investors bet the Federal Reserve will trim its rate hikes to tamp down inflation.

Many markets in the region were closed for Lunar New Year holidays.

A preliminary reading for manufacturing in Japan remained steady in January at its lowest level in over two years, with exports declining faster. But the strength in technology shares helped spur buying of manufacturers like electronics maker Omron, which gained 2.7%, and robot supplier Fanuc Corp., which gained 2%.

Tokyo's Nikkei 225 index gained 1.7% to 27,367.03 and the Sensex in Mumbai added 0.5% to 61,223.88. Australia's S&P/ASX 200 rose 0.4% to 7,486.60 while the SET in Bangkok was up 0.2%.

“Markets are assuming a pro-growth stance as investors get more comfortable with the idea of an improving macro backdrop ahead of a busy week of data from both a macro and micro perspective," Stephen Innes of SPI Asset Management said in a commentary.

“And if one takes a look under the hood, in the heat of the moment, it has that unmistakable feel of pandemic-era trading, supported by solid moves in mega cap tech stocks," he said.

On Monday, the S&P 500 rose 1.2% to 4,019.81. The Dow Jones Industrial Average rose 0.8% to 33,629.56 and the tech-heavy Nasdaq composite closed 2% higher, at 11,364.41. Small company stocks also rose, pushing the Russell 2000 index up 1.3% to 1,890.77.

Hub peek embed (Inflation) - Compressed layout (automatic embed)

Tech stocks in the S&P 500 rose 2.3% Monday, with chipmaker Advanced Micro Devices leading the pack with a 9.2% gain.

Markets have been swinging between hope and caution as investors watch to see if the Federal Reserve will dial back on interest rate hikes meant to tame inflation, which has begun to abate in many countries in recent months. The fear is that the Fed and other central banks might go too far, tipping the U.S. and other economies into recession by slowing spending and investment too much.

The Fed has already pulled its key overnight rate up to a range of 4.25% to 4.5% from virtually zero early last year, and traders are now betting on a nearly 99% probability that the Fed will raise rates by just a quarter point on Feb. 1, according to CME Group.

The yield on the two-year Treasury, which tends to track expectations for Fed movement, rose to 4.22% from 4.18% late Friday. The 10-year yield, which helps set rates for mortgages and other important loans, rose to 3.52% from 3.48%.

Another partisan battle in Washington over the nation’s ability to borrow may roil markets if the Democrats and Republicans can’t agree on allowing the U.S. government to borrow more.

Corporate earnings are seen as a good indicator of how well companies are coping with the slowing economy and higher costs. Profits are one of the main levers that set stock prices.

This week, more than seven dozen companies in the S&P 500 will report their results for the last three months of 2022. That includes headliners like Microsoft, on Tuesday, and Tesla on Wednesday.

Such big tech-oriented companies have begun layoffs to slash expenses after acknowledging they misread the boom coming out of the pandemic and grew too quickly. Spotify said Monday it will cut 6% of its workforce, and it shares rose 2.1%.

Big Tech stocks have a big influence on Wall Street because they’re some of the market’s most valuable. After soaring through the pandemic thanks to super-low interest rates and a surge in demand from suddenly homebound customers, they’ve been struggling over the last year as the Fed has sharply raised rates.

In other trading Tuesday, U.S. benchmark crude oil picked up 3 cents to $81.65 per barrel in electronic trading on the New York Mercantile Exchange. It lost 2 cents to $81.62 on Monday.

Brent crude, the pricing benchmark for international trading, lost 10 cents to $88.06 per barrel.

The dollar fell to 130.27 Japanese yen from 130.66 yen. The euro rose to $1.0877 from $1.0875.

___

AP Business writers Stan Choe and Alex Veiga contributed.

Fanuc Corp

Asian shares rise, track Wall St gains as earnings ramp up