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TOKYO (AP) – Asian stocks were mostly higher on Wednesday as regional markets saw strong economic signs from the U.S. and China as drivers of growth.

Benchmarks rose in Japan, China and Australia, although stocks fell in South Korea. Analysts warned that major risks remain, including rising cases of COVID-19 in some countries in Asia, concerns about global inflation and China’s policies to curb infections.

“Economic growth expectations in China and the US will likely remain key to gauge recession fears. China’s ‘Zero COVID’ policy remains a significant headwind for global growth,” Anderson Alves told ActivTrades.

Japan’s benchmark Nikkei 225 added 1.2% to end at 29,222.77. Australia’s S&P/ASX 200 rose 0.3% to 7,127.70. South Korea’s Kospi lost 0.5% to 2,521.84. Hong Kong’s Hang Seng rose 0.6% to 19,948.66, while the Shanghai Composite rose 0.5% to 3,292.53.

In New Zealand, the central bank raised its benchmark interest rate from 2.5% to 3% as it continues to try to fight inflation. The Reserve Bank of New Zealand said domestic spending had remained resilient in the face of local and global headwinds, and employment was robust. Falling oil prices had given inflation some alarm, the bank said, but it needed to continue to tighten monetary conditions until inflation returned to its target range of 1% to 3%.

New Zealand inflation stands at 7.3% and unemployment at 3.3%.

In Japan, government data showed a trade deficit in July for the twelfth consecutive month. Rising oil prices and the falling yen were key factors. Japan imports almost all of its oil.

New cases of COVID-19 have increased in recent weeks as restrictions on economic activities are eased. Ambulances had to drive around for hours looking for hospitals that could accept patients. But domestic travel and shopping appears to have returned, boosting consumption.

Wall Street ended a hectic day of trading on Tuesday with a mostly higher finish, adding to the market’s recent run of gains.

The S&P 500 rose 0.2%, its third straight gain, adding 8.06 points to 4,305.20. The Dow gained 239.57 points, or 0.7%, to 34,152.01. The Nasdaq fell 25.50 points, or 0.2%, to 13,102.55.

Shares of smaller companies fell. The Russell 2000 fell 0.82 points, or less than 0.1%, to 2,020.53. Bond yields gained ground. The 10-year Treasury yield rose to 2.81% from 2.79% late Monday.

The latest market moves came as traders cautiously reviewed encouraging financial results from major retailers.

Walmart rose 5.1% and after the nation’s largest retailer reported strong results that easily beat analysts’ forecasts. Home Depot rose 4.1% after also reporting better-than-expected results.

Technology, healthcare and energy stocks fell, capping the broader market’s advance. Broadcom fell 1.3%, Moderna fell 5% for the biggest drop in the S&P 500 and Marathon Oil fell 1.1%. Retailers, consumer goods manufacturers and banks posted solid gains.

US stocks had their best month in a year and a half in July and the winning streak has continued into August, partly on hopes that inflation will ease.. The latest government report on consumer prices showed this that inflation essentially stagnated from June to July.

The latest results from retailers show that spending remains strong even as US consumers face the highest inflation in 40 years. Wall Street has been concerned that higher prices for everything from food to clothing could dampen the economy’s main driver of growth, consumer spending.

Investors will get more updates on the retail sector on Wednesday, when Target reports its results and the U.S. Commerce Department releases its July retail sales report. Economists polled by FactSet expect modest growth of 0.2% from June, when sales rose 1%.

Retail reports are capping off the latest round of business earnings, which have been closely watched by investors trying to gauge the impact of inflation on businesses and consumers, while trying to gauge how the US Federal Reserve will react.

The central bank is raising interest rates in an effort to curb economic growth and curb inflation, though it risks slowing too hard and pushing the economy into recession.

The Fed raised its benchmark interest rate in July by three-quarters of a point for the second time in a row. On Wednesday, Wall Street will get more details on the process behind that decision when the Fed releases the minutes of that meeting. Investors expect a half-point hike at the Fed’s next meeting in August, according to CME’s FedWatch tool.

In energy trading, benchmark US crude rose 72 cents to $87.25 a barrel. The price of US crude fell 3.2% on Tuesday. Brent crude, the international standard, gained 65 cents to $92.99 a barrel.

In currency trading, the US dollar rose to 134.78 Japanese yen from 134.22 yen. The euro was at $1.0157, down from $1.0171.

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AP business writers Damian J. Troise and Alex Veiga contributed. AP writer Nick Perry contributed from Wellington, New Zealand.

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Yuri Kageyama is on Twitter at https://twitter.com/yurikageyama