TOKYO (AP) — Asian stocks mostly surged on Friday after Wall Street’s winning streak reached a fourth day, buoyed by the latest signal that inflation may be easing.
Japan’s benchmark Nikkei 225 lost earlier gains, ending down 0.1% at 32,391.26. Australia’s S&P/ASX 200 rose 0.9% to 7,308.50. South Korea’s Kospi jumped 1.3% to 2,623.83. Hong Kong’s Hang Seng edged up 0.4% to 19,433.22, while the Shanghai Composite gained 0.1% to 3,240.96.
“Positive sentiment within Asian equity markets accelerated as investors welcomed slowing inflation,” ActivTrades’ Anderson Alves said in a commentary.
Market watchers are also eagerly awaiting regional data due next week, including consumer prices from Japan and GDP from China.
On Wall Street, the S&P 500 rose 0.8% to 4,510.04, its highest close since April 2022. The Dow Jones Industrial Average rose 0.1% to 34,395.14, and the composite Nasdaq rebounded 1.6% to 14,138.57 as Big Tech shares led the way.
The S&P 500 is on track for its seventh winning week in the past nine years after more data raised hopes that inflation would cool enough for the Federal Reserve to soon end its runaway streak of interest rate hikes. Wholesale inflation slowed more than expected in June, and prices paid by producers rose only 0.1% in the month from a year earlier. That’s down from inflation of 11.2% last summer.
High inflation was the main reason investors feared a possible recession, as the Federal Reserve raised interest rates to keep prices in check. High rates have undermined inflation by sharply slowing the entire economy and affecting investment prices. They can also cause unforeseen parts of the economy to break down.
Traders remain all but confident that the Fed will raise the fed funds rate at its next meeting in two weeks to its highest level since 2001. But this week’s inflation data has also prompted traders to place bets that this is the last rate increase of this cycle.
A report on Wednesday showed prices consumers paid in June were 3% higher than a year earlier, down from inflation of more than 9% last summer. It was a “cool summer breeze,” as Deutsche Bank economists describe it.
Easier interest rates favor all kinds of investments. But many investors see big tech and other high-growth stocks among the main beneficiaries.
That had Amazon, Alphabet and Nvidia among the strongest forces pushing the S&P 500 higher. Amazon gained 2.7% after saying the first day of its annual Prime Day event on Tuesday was the biggest day of sales ever. his history.
Alphabet rose 4.7% after Google announced it was rolling out Bard, its artificial intelligence-powered chatbot, to more countries around the world and launching new features for it.
Nvidia, which has been at the center of a Wall Street frenzy over AI, rose 4.7%.
A resilient labor market has kept the economy out of a recession, although too strong employment could prompt the Federal Reserve to become more aggressive in raising interest rates. A report on Thursday showed fewer workers applied for unemployment benefits last week than expected.
As inflation shows encouraging signals, Wall Street could build too quickly into a consensus that it will continue to cool enough for the Fed to ease rates and stave off a recession, senior research analyst Chun Wang warned. and co-portfolio manager at Leuthold.
In a report, Wang said the market may be underestimating the risk that inflation will remain stuck at 3% to 4% over the next six to 12 months and that “the way forward for inflation and Fed policy is not a no-brainer at all. We have a sneaky suspicion that the current soft landing narrative will be seriously challenged before the first leaf falls from the tree.
In energy trading, benchmark U.S. crude added 16 cents to $77.05 a barrel in electronic trading on the New York Mercantile Exchange. It took $1.14 on Thursday to $76.89 a barrel.
Brent, the international standard, rose 12 cents to $81.48 a barrel.
In currency trading, the US dollar fell slightly to 137.83 Japanese yen from 138.05 yen. The euro traded at $1.1222, down from $1.1228.