Asian stocks jump as Wall Street returns to its highest level in over a year

TOKYO (AP) — Asian stocks rose on 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 little. little more than expected last month.

Japan’s benchmark Nikkei 225 jumped 1.5% in afternoon trade to 32,425.69.

Hong Kong’s Hang Seng jumped 2.6% to 19,357.96, while the Shanghai Composite gained 1.3% to 3,236.86, even as China reported a drop in trading in June.

China’s exports fell 12.4% in June from a year earlier as demand weakened after central banks raised interest rates to curb inflation, even as Chinese leaders were struggling to keep the post-COVID recovery from faltering. Customs data released on Thursday showed imports fell 6.8%, while the trade surplus rose to $70.6 billion from $65.8 billion in May.

“China will probably recover at some point, but we are unlikely to see Chinese growth putting strong pressure on commodity markets. This is good news for inflation watchers,” said Ipek Ozkardeskaya , senior analyst at Swissquote Bank, in a commentary.

Australia’s S&P/ASX 200 gained 1.7% to 7,253.50. The South Korean Kospi rose 0.8% to 2,595.51.

On Wall Street on Wednesday, the S&P 500 rose 0.7% to 4,472.16 to its highest 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 stilted utility companies, although the gains faded a bit as the day progressed.

The latest U.S. government inflation update showed 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 just over 9% last summer. Perhaps more importantly, it was slightly below economists’ expectations.

High inflation has been at the center of Wall Street’s troubles as it caused the Federal Reserve to raise interest rates at a breakneck pace. Higher rates have reduced inflation by slowing the overall economy and hurting investment prices, and they have already done damage to the banking, manufacturing and other sectors.

Traders remain all but confident that the Fed will raise the fed 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 rising for this to be the latest increase after rates started last year at virtually zero.

Treasury yields fell in the bond market after colder inflation data prompted traders to cut bets for Fed action later this year.

The 10-year Treasury yield fell to 3.86% from 3.98% on Tuesday evening. It helps set the rates for mortgages and other large loans.

The two-year Treasury yield fell to 4.73% from 4.89%. It tends to track Fed expectations more closely.

A resilient labor market has helped keep the economy out of a recession, although it is also under pressure from higher rates. The Federal Reserve’s latest “Beige Book” reported on Wednesday that overall economic activity has increased slightly since late May. He also said several Fed districts have noticed some slowing in inflation.

In energy trading, benchmark U.S. crude rose 19 cents to $75.94 a barrel. Brent crude, the international standard, gained 25 cents to $80.36 a barrel.

In currency trading, the US dollar rose slightly to 138.71 Japanese yen from 138.41 yen. The Euro traded at $1.1138, down from $1.1128 previously.


AP Business Writer Zen Soo contributed.

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