Stock market today: Asian shares mixed in choppy trading after US inflation report

Tokyo –

Asian stocks were mixed in volatile trading on Thursday after a report showed US inflation was cooling even though it was still too high.

Japan’s benchmark Nikkei Stock Average fell nearly 0.1% in afternoon trading to 29,102.25 yen. Australia’s S&P/ASX 200 Index fell 0.1% to 7,249.00. South Korea’s Kospi rose 0.1% to 2,499.99. Hong Kong’s Hang Seng Index fell 0.4% to 19,693.89, while the Shanghai Composite Index was little changed, rising less than 0.1% to 3,319.53.

Concerns over the Chinese economy remain a major focus, especially in the Asian region, with trade data released on Tuesday being the latest concern.

“China could enter a deflationary funk similar to the one Japan is starting to break out of,” said Steven Innes, managing partner at SPI Asset Management.

On Wall Street, the S&P 500 index rose 0.2% to 4,129.20 after oscillating between gains and losses throughout the day. The Dow Jones Industrial Average fell 0.2 percent to $33,487.87, while the Nasdaq Composite Index rose 1 percent to $12,306.44.

Bond prices rose after a long-awaited report that consumer-level inflation eased to a two-year low of 4.9% last month. That was slightly above economists’ expectations, and other underlying measures of inflation were also very close to expectations.

As a result, Wall Street sees the Fed still likely to keep rates unchanged at its next meeting in June. It was the first time in more than a year that the Fed did not raise rates at a meeting, and a pause would give the economy and financial markets some breathing room.

“There was some concern that it was going to be hotter than we had feared,” said Ross Mayfield, an investment strategy analyst at Baird. “It’s not necessarily exciting coverage, but I think there was enough good news built in that it wouldn’t affect the trajectory of the Fed or the economy that much.”

The Fed has raised interest rates at a breakneck pace in hopes of keeping inflation in check. However, high interest rates slow down the economy as a whole, with far-reaching effects on investment prices. They have already crashed stock prices, wreaked havoc on the banking system and protracted the economy to the point that many investors expect recession this year.

The news prompted traders to raise their bets that Fed rates will stabilize in June to nearly 94%, according to CME Group data.

Stocks that would benefit most from easier interest rates led Wall Street, including big tech and other high-growth stocks. Amazon’s 3.3% gain and Microsoft’s 1.7% gain were the two main drivers of the S&P 500’s rise.

Inflation remains well above the Fed’s 2% target and continues to weigh on households across the economy, especially low-income households.

Most S&P 500 companies have beaten profit expectations so far in the final stages of the earnings season. However, the company is still on pace to report overall profit declines year-over-year, marking the second consecutive quarter of declines.

In the bond market, expectations of the Fed’s interest rate moratorium increased, driving yields lower.

The 10-year Treasury yield fell to 3.43% from 3.52%. Helps set interest rates for mortgages and other important loans. Expectations of Fed action pushed the two-year US Treasury yield down to 3.90% from 4.03%.

In addition to concerns about interest rates and inflation, some in the bond market are reeling from fears that the U.S. government is edging closer to defaulting on its debt. Nothing like this has ever happened before, and economists warn that a default could have devastating effects on the economy and financial markets.

In energy trading, benchmark US crude rose 70 cents to $73.26 a barrel. International standard Brent crude added 75 cents to $77.16 a barrel.

In foreign exchange transactions, the dollar fell slightly from 134.28 yen to 134.24 yen. The euro fell from $1.0984 to $1.0980.

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AP business writer Stan Cho contributes from New York