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By YURI KAGEYAMA, AP Business Writer

TOKYO (AP) – Asian stocks were mostly higher on Tuesday after a rally on Wall Street, despite risks for regional investors reflected in negative economic data from China.

The benchmark index in Tokyo was little changed, erasing earlier gains, but indices in South Korea, Australia and China gained in morning trading.

The drop in oil prices is a positive factor for the region. In Japan, recent economic data has shown a recovery, but high rates of COVID-19 are fueling fears that people will be restricted from travel and other economic activities.

Some analysts say share prices have not properly reflected the real risks.

“It doesn’t seem to matter what the news is, there’s just a huge appetite to buy stocks. And to keep buying,” said Clifford Bennett, chief economist at ACY Securities.

“To talk about the bottom having already been priced in seems a bit premature. If the market goes down again after all this long positioning, it will come down with a thunderous impact. Buyers beware.”

Japan’s benchmark Nikkei 225 was little changed at 28,870.04 in morning trading. South Korea’s Kospi rose 0.5% to 2,540.41. Australia’s S&P/ASX 200 rose 0.6% to 7,107.50. Hong Kong’s Hang Seng rose 0.4% to 20,118.35, while the Shanghai Composite gained 0.4% to 3,287.50.

Wall Street stocks rallied to close higher, extending the market’s recent winning ways as investors await several updates from retailers this week.

The S&P 500 rose 16.99 points, or 0.4%, to 4,297.14. The Dow added 151.39 points, or 0.5%, to 33,912.44. The Nasdaq gained 80.87 points, or 0.6%, to 13,128.05. The Russell 2000 rose 4.73 points, or 0.2%, to 2,021.35.

The market got off to a rocky start as traders reacted to news overnight that China’s central bank cut a key interest rate, acknowledging that more needs to be done to shore up its economy. The move is the latest warning for markets already on edge from record inflation and recession fears in the US and elsewhere.

China is the world’s second largest consumer of crude oil, so the news weighed on energy prices. US crude prices fell 2.9% on concerns about the global economy and weighed heavily on energy stocks.

In Tuesday’s trading, benchmark US crude fell 57 cents to $88.84 a barrel. Brent crude, the international standard, lost 86 cents to $94.24.

Treasury yields fell as a report showed manufacturing in New York state unexpectedly contracted. The yield on the 10-year Treasury, which banks use to set mortgage rates, fell to 2.79 percent from 2.83 percent on Friday afternoon.

Still, all but two of the S&P 500’s 11 sectors closed higher. Technology stocks, retailers and other companies that rely on direct consumer spending accounted for a large portion of the gains.

Moderna rose 3.3% after British regulators approved an updated version of its COVID-19 vaccine.

The market’s choppy start to the week follows four straight weeks of gains for the benchmark S&P 500 on hopes that inflation will peak and the Federal Reserve may ease its aggressive rate hikes. The central bank has raised short-term interest rates to help slow economic growth and cool the highest inflation in 40 years.

Wall Street worries that the Fed could cut back too hard and send the economy into recession, and any sign that inflation may be peaking or falling has helped ease some of those worries.

Investors are also closely watching how inflation affects businesses and consumers. Spending has slowed and the overall economy has already contracted for two quarters in a row. Several major retailers will give investors more details on how their businesses are holding up when they report earnings this week.

Home Depot and Walmart report results Tuesday, and Target’s results are due Wednesday. The Commerce Department also releases its retail sales report for July on Wednesday. Economists polled by FactSet expect modest growth of 0.2% from June, when sales rose 1%.

In currency trade, the US dollar rose to 133.40 Japanese yen from 133.27 yen. The euro was at $1.0167, little changed from $1.0165.

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

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