TOKYO (AP) — Asian shares rose Thursday, boosted by Wall Street's return to its highest level in more than a year after a report showed U.S. consumer inflation cooled a bit more than expected last month.
Japan's benchmark Nikkei 225 rose 1.3% in morning trading to 32,358.33. Australia's S&P/ASX 200 added 1.4% to 7,236.80. South Korea's Kospi jumped nearly 1.0% to 2,599.75. Hong Kong's Hang Seng surged 2.3% to 19,296.71, while the Shanghai Composite gained 0.8% to 3,220.19.
Investors were watching for China's monthly trade data to see how the world's largest economy is faring after the end of pandemic controls late last year.
On Wall Street, the S&P 500 rose 0.7% to 4,472.16 to reach its strongest closing level since April 2022. The Dow Jones Industrial Average rose 0.3% to 34,347.43, and the Nasdaq composite gained 1.2% to 13,918.96.
Most stocks rose, from flashy Big Tech behemoths to staid utility companies, though the gains faded a bit as the day progressed.
The U.S. government’s latest update on inflation showed that consumers paid prices for gasoline, food and other items that were 3% higher overall in June than a year earlier. That’s down from 4% inflation in May and a bit more than 9% last summer. Perhaps more importantly, it was a touch lower than economists expected.
High inflation has been at the center of Wall Street’s problems because it’s driven the Federal Reserve to jack up interest rates at a blistering pace. Higher rates undercut inflation by slowing the entire economy and hurting investment prices, and they've already caused damage to the banking, manufacturing and other industries.
Traders remain nearly convinced the Fed will raise the federal funds rate at its meeting in two weeks to a range of 5.25% to 5.50%, which would be its highest level since 2001. But expectations are also climbing for that to be the final increase after rates started last year at virtually zero.
“They’ll probably still pull the trigger on a hike, but it will be based on symbolism more than substance,” said Brian Jacobsen, chief economist at Annex Wealth Management. He pointed to another report earlier this month that showed a slowdown in U.S. jobs growth, which could also take some pressure off inflation.
Treasury yields tumbled in the bond market after the cooler inflation data pushed traders to trim bets for Fed action later this year.
The 10-year Treasury yield fell to 3.86% from 3.98% late Tuesday. It helps set rates for mortgages and other important loans.
The two-year Treasury yield dropped to 4.73% from 4.89%. It tends to follow expectations for the Fed more closely.
A resilient job market has helped to keep the economy out of a recession, though it's also under pressure from higher rates. The latest “Beige Book” from the Federal Reserve on Wednesday said that overall economic activity has increased slightly since late May. It also said several Fed districts have noticed some slowing in inflation.
In the meantime, stocks that tend to benefit the most from lower interest rates led the way on Wall Street Wednesday. That includes big technology and other high-growth stocks.
Nvidia was the strongest force pushing up the S&P 500 after it jumped 3.5%. Microsoft was close behind with a gain of 1.4%.
Banks also rose on hopes for a halt to rate hikes. Earlier rate increases strained their business by knocking down the value of loans and bonds bought when rates were ultra low. Following the March collapses of three banks, their stocks tumbled as Wall Street hunted for the industry's next potential weak link.
KeyCorp. rose 3.1%, Comerica gained 3.1% and Zions Bancorp. added 2.8%. Their shares are still sharply lower for the year.
Domino's Pizza jumped 11.1% for the biggest gain in the index after it announced a partnership where customers can order its pies through Uber Eats.
In energy trading, benchmark U.S. crude rose 20 cents to $75.95 a barrel. Brent crude, the international standard, gained 24 cents to $80.35 a barrel.
In currency trading, the U.S. dollar edged up to 138.51 Japanese yen from 138.41 yen. The euro cost $1.1143, up from $1.1128.
AP Business Writer Stan Choe contributed.
Yuri Kageyama, The Associated Press