Asian stock markets followed Wall Street higher on Wednesday after a cooler reading on U.S. inflation fueled hopes the Federal Reserve will postpone a possible interest rate hike.
© (Louise Delmotte / Associated Press)
A pedestrian passes by the Hong Kong Stock Exchange electronic screen in Hong Kong, Wednesday, June 14, 2023. Asian stock markets followed Wall Street higher on Wednesday after a cooler reading on U.S. inflation fueled hopes the Federal Reserve will postpone a possible interest rate hike. (AP Photo/Louise Delmotte) ((Louise Delmotte / Associated Press))
Shanghai, Tokyo, Hong Kong and Sydney rose.
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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 said previously 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,” said Clifford Bennett of ACY Securities in a report.
The Shanghai Composite Index rose 0.3% to 3,243.66 and the Nikkei 225 in Tokyo advanced 33,338.37. The Hang Seng in Hong Kong added 0.2% to 19,562.35.
The Kospi in South Korea was off 0.2% at 2,633.34 and Sydney’s S&P-ASX 200 gained 0.3% to 7,158.70.
New Zealand declined while Singapore and Bangkok advanced.
On Wall Street, the S&P 500 rose 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 rallied 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 lost 23 cents to $69.19 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, shed 19 cents to $74.10 per barrel in London. It gained $2.45 the previous session to $74.29.
The dollar declined to 140.08 yen from Tuesday’s 140.29 yen. The euro rose to $1.0795 from $1.0790.
This story originally appeared in San Diego Union-Tribune.