Asian stocks rebound, dispelling inflation fears | National


By ELAINE KURTENBACH – AP Business Writer

Asian stocks rebounded on Friday from losses earlier in the week, ignoring data showing wholesale prices in the United States climbed 11% in April from a year earlier.

The regional rally followed a mixed, muted close on Wall Street. Oil prices and US futures were also higher.

Investors are wondering about the continuation of inflation and the US central bank’s response to it. Trading has been volatile, with indices subject to wild swings as investors try to shield their portfolios from the impact of the highest inflation in decades.

Federal Reserve Chairman Jerome Powell just won Senate confirmation for a second four-year term for the first time on Thursday recognized that high inflation and weakness in other economies could thwart its efforts to avoid a recession.

Powell had previously sought to portray the Fed’s efforts to tighten interest rates as consistent with a so-called “soft landing” for the economy.

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Hong Kong’s Hang Seng Index gained 2.2% to 19,805.34 and the Nikkei 225 in Tokyo jumped 2.8% to 26,461.49. South Korea’s Kospi gained 1.7% to 2,594.95 and in Sydney, the S&P/ASX 200 rose 1.5% to 7,046.50.

Actions taken by central banks to combat price increases by raising interest rates are dragging some currencies down as the dollar rises. The Japanese yen has weakened sharply in recent months, while the Chinese yuan, whose value against other currencies is regulated, has also weakened.

Likewise, the euro weakened amid the fighting in Ukraine and uncertainty over Russian gas and oil supplies . The euro was trading at $1.0397 early Friday, after falling below the $1.0500 level it had been hovering around for most of the week.

“European risk sentiment is maimed by news of Russia cutting gas supplies in retaliation for sanctions,” Stephen Innes of SPI Asset Management said in a commentary.

“The EUR (euro) crashed to $1.05 and even dropped to $1.04 on the news. Indeed, it really highlights the uncertainty as we move forward with threat and disruption of Russian energy supply,” he said.

The dollar was at 128.96 yen, down from 128.42. Against the Chinese yuan, it was 6.79 to the dollar, down from around 6.41 yuan a month ago.

On Thursday, the S&P 500 closed down 0.1%, at 3,930.08, after falling 1.9% earlier in the day. The Dow Jones Industrial Average fell 0.3% to 31,730.30, while the Nasdaq rose 0.1% to 11,370.96.

The indices are on pace for steep weekly declines, extending the market slump so far this year. The benchmark S&P 500 is now down 17.5% this year, while the Nasdaq is down 27.3%.

Small company stocks held up much better than the rest of the market. The Russell 2000 rose 1.2% to 1,739.38.

Another dire inflation reading sparked a sell-off early Thursday, with tech stocks weighing the most on the S&P 500.

The Department of Labor report that wholesale prices jumped 11% in April from a year earlier adds to fears that manufacturing costs will be passed on to consumers, who could cut back on spending, dampening economic growth.

On Wednesday, the Labor Department’s report on consumer price came hotter than expected on Wall Street, showing a bigger-than-expected rise in prices outside of food and gasoline. This “underlying inflation” may be more predictive of future trends.

Inflation has been aggravated by The Russian invasion of Ukraine and the impact of the conflict on rising energy prices. China’s recent lockdowns while concerns over a resurgence of COVID-19 have also aggravated supply chain and production issues at the center of rising inflation.

The impact of rising prices for consumers has been global. Thusday, Britain said its economy grew at the slowest pace in a year during the first quarter. This raises fears that the country is heading into a recession.

In other trading, the benchmark U.S. crude oil gained $1.21 to $107.34 a barrel in electronic trading on the New York Mercantile Exchange. It gained 42 cents to $106.13 a barrel on Thursday.

Brent crude, the pricing basis for international crude trading, added $1.45 to $108.90 a barrel.

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