Asian shares were mostly higher Monday after a rally on Wall Street driven by reports that showed inflation abating, assuaging fears over the threat of a recession.
Japan's benchmark Nikkei 225 rose nearly 1.7% to 33,738.80 in morning trading. Australia's S&P/ASX 200 added 0.5% to 7,239.80. South Korea's Kospi jumped 1.4% to 2,601.00. Hong Kong's Hang Seng surged 1.7% to 19,243.80, while the Shanghai Composite gained 1.3% to 3,243.24.
“Asia gets the new half kicked off amid a growing sense of optimism, with low volatility buoying markets on the back of a surprisingly strong run of U.S. economic data, wiping the slate clean of recession concerns,” Stephen Innes, managing partner at SPI Asset Management, said in a report.
The quarterly “tankan report” of business sentiment compiled by the Bank of Japan showed an improvement for the fifth consecutive quarter, from June last year, with the main indicator number rising by 3 points to plus 23.
Wall Street closed a winning week last week, with the S&P 500 climbing 1.2% to 4,450.38, its highest level since April 2022. The Dow Jones Industrial Average rose 0.8% to 34,407.60 and the Nasdaq composite jumped 1.4% to 13,787.92.
U.S. trading is closed for half a day Monday and all of Tuesday for the Independence Day holiday.
Investors are hoping price increases will ease enough for the Federal Reserve to soon halt its hikes to interest rates. That would mean less pressure for the U.S. economy and for global financial markets.
A report on Friday showed a measure of inflation that the Fed prefers to use eased in May. It also said growth in spending by consumers slowed by more than expected. If fewer dollars are chasing after purchases, that could remove more pressure on inflation.
The Fed has already raised rates a mammoth 5 percentage points from virtually zero early last year. Traders on Wall Street pared back bets that the Fed may hike interest rates twice again this year, with the majority betting the federal funds rate will be only 0.25 percentage points higher at the end of 2023, if it all, according to data from CME Group.
Yields in the bond market turned lower Friday after the release of the economic data. The 10-year Treasury yield fell to 3.82% from nearly 3.87% just before the report’s release. It helps set rates for mortgages and other important loans.
The S&P 500 closed out its sixth winning week in its last seven in June and its best month since October. The index's gain of nearly 16% through the first six months of the year is better than it's done in 16 of the last 23 full years.
In energy trading, benchmark U.S. crude rose 3 cents to $70.67 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, added 2 cents to $75.43 a barrel.
In currency trading, the U.S. dollar edged up to 144.54 Japanese yen from 144.30 yen. The euro cost $1.0914, down from $1.0924.
