Asian stocks rose on Thursday after U.S. stocks rose to record levels on hopes that inflation is getting back on track.
This optimism is fueled by a report showing that the prices U.S. consumers had to pay for gasoline, car insurance, and everything else in April were 3.4% higher overall compared to the same month a year earlier. It comes from. This is painful, but not as bad as March’s inflation rate of 3.5%.
The economic slowdown came as a relief after consumer price index (CPI) releases earlier this year were consistently lower than expected. Wednesday’s report is based on expectations that the U.S. Federal Reserve could cut its key interest rates later this year, a major concern for most investors.
In Asian trading, Tokyo’s Nikkei stock average rose 0.8% to 38,676.83 yen, despite the government reporting that Japan’s economy contracted at an annual rate of 2% in the January-March quarter. became.
Hong Kong’s Hang Seng Index rose 1.6% to 19,369.06, while the Shanghai Composite Index rose 0.5% to 3,134.97.
In Australia, the S&P/ASX 200 rose 1.6% to 7,874.70 and South Korea’s Kospi rose 0.8% to 2,751.32.
Taiwan’s Tyex rose 0.7% and India’s Sensex rose 0.5%.
On Wednesday, the S&P 500 rose 1.2% to close at 5,308.15, surpassing its all-time high set a month and a half ago. The Dow Jones Industrial Average rose 0.9% to $39,908.00, and the Nasdaq rose 1.4% to $16,742.39, breaking its own record set the previous day.
Stocks that tend to benefit most from lower interest rates led the market. Homebuilders rose on hopes that the Fed’s interest rate cuts would ease mortgage rates, with shares in Lennar, DR Horton and Pulto Group all rising more than 5%. Big Tech and other high-growth stocks also rode the wave of lower interest rate expectations, with Nvidia’s 3.6% rise being the strongest force pushing the S&P 500 higher.
Real estate stocks in the S&P 500 rose 1.7%, while stocks of power companies and other utilities rose 1.4%. The lower a bond’s interest payments are, the better the dividends it pays will look to investors.
On Wall Street, Petco Health + Wellness led the market, surging 27.9%. Glenn Murphy, CEO of investment firm FIS Holdings, has been appointed executive chairman.
The losers were GameStop and AMC Entertainment, which reversed momentum after an incredible start to the week. GameStop is down 18.9%, but is still up 126.5% for the week so far.
AMC Entertainment fell 20% after announcing it would issue about 23.3 million shares to erase $163.9 million in debt.
A separate report on Wednesday showed that U.S. retailer spending in April did not grow from March. Economists had expected growth of 0.4%.
A slowdown in retail sales could be seen as a positive for the market as it could reduce upward pressure on inflation. But weak U.S. consumer spending will erode one of the main pillars that keep the economy from recession. Pressures on low-income households are particularly high.
In the bond market, the yield on the 10-year U.S. Treasury note fell to 4.34% from 4.45% late Tuesday. The two-year Treasury yield was more closely tied to expectations for Fed action, falling to 4.72% from 4.82%.
Traders now expect a nearly 95% chance that the Fed will cut key interest rates at least once this year, according to CME Group data. This is up from just under 90% the day before.
In other trading early Thursday, benchmark U.S. crude oil rose 42 cents to $79.05 a barrel in electronic trading on the New York Mercantile Exchange. It rose 61 cents on Wednesday.
Brent crude, the international standard crude, rose 39 cents to $83.14 per barrel.
The dollar fell from 154.88 yen to 154.03 yen. The euro rose to $1.0888 from $1.0885.
___
AP Business writers Matt Ott and Stan Choe contributed.
