Stock market today: Asian stocks mixed after US inflation cools

Asian stock markets are mixed after a cooler reading on U.S. inflation fueled hopes the Federal Reserve will postpone a possible interest rate hike

Joe McDonald
Wednesday 14 June 2023 06:24 BST

Asian stock markets were mixed Wednesday after a cooler reading on U.S. inflation buoyed hopes the Federal Reserve will postpone a possible interest rate hike.

Shanghai, Tokyo and Sydney rose while Hong Kong and Seoul declined.

Wall Street's benchmark S&P 500 index gained 0.7% to a 14-month high after government data Tuesday showed U.S. consumer inflation eased to 4% over a year earlier in May from the previous month's 4.9%. It was less than half last June's peak of 9.1% but still double the Fed's 2% target.

That reinforced hopes the Fed will avoid announcing another rate hike when its monthly meeting ends Wednesday. Two Fed board members have said the U.S. central bank should put off another hike while it studies the impact of previous increases.

“The Fed will see this as a window of opportunity to pause,” Clifford Bennett of ACY Securities said in a report.

The Shanghai Composite Index rose 0.2% to 3,241.57 and the Nikkei 225 in Tokyo advanced 1.5% to 33,495.29. The Hang Seng in Hong Kong lost less than 0.1% to 19,511.86.

The Kospi in South Korea was off 0.7% at 2,619.68 and Sydney's S&P-ASX 200 gained 0.3% to 7,159.90.

India's Sensex opened down 0.1% at 63,071.69. New Zealand declined while Singapore and Bangkok advanced.

On Wall Street, the S&P 500 rose 30.08 points Tuesday to 4,369.01. The Dow Jones Industrial Average gained 0.4% to 34,212.12 and the Nasdaq composite rallied 0.8% to 13,573.32.

Traders hope the U.S. economy can avoid a recession even after the Fed raised its benchmark lending rate to a 16-year high to extinguish surging inflation by cooling business activity.

Tuesday's inflation reading prompted traders to increase bets for the Fed to announce no change to interest rates. That would be the first monthly meeting in more than a year without a rate hike.

Previous rate hikes led to a contraction in manufacturing and three high-profile bank failures.

Nvidia gained 3.9% and was the strongest force pushing up the S&P 500, along with other technology stocks. Tech and other high-growth stocks are seen as some of the biggest beneficiaries if the Fed eases off rate hikes.

Nvidia has gotten an added boost from Wall Street's enthusiasm for artificial intelligence.

On Tuesday, four out of five stocks in the S&P 500 rose.

Raw-material producers and industrial companies had some of the biggest gains amid hopes for a resilient economy. Miner Freeport-McMoRan rose 5.3%.

Many traders expect the Fed to resume raising rates in July even if it holds steady this week.

Zions Bancorp. fell 1.6% after it appeared to cut its forecast for upcoming net interest income in an investor presentation.

Many investors came into this year predicting a recession would hit in the third quarter, which is two weeks away. Yet a resilient job market has propped up economic activity.

In energy markets, benchmark U.S. crude rose 7 cents to $69.49 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $2.30 on Tuesday to $69.42. Brent crude, the price basis for international oil trading, added 16 cents to $74.45 per barrel in London. It gained $2.45 the previous session to $74.29.

The dollar declined to 140.12 yen from Tuesday's 140.29 yen. The euro was unchanged at $1.0790.

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