TOKYO — Stock markets across Asia largely moved higher Wednesday, following Wall Street’s lead after a new report showed U.S. inflation came in lower than analysts had predicted last month.
South Korea’s Kospi index surged 7.1%, reaching 7,343.37, as semiconductor stocks bounced back from a recent downturn. Japan’s Nikkei 225 climbed 0.9% to close at 68,353.91, while Australia’s S&P/ASX 200 edged up 0.2% to 8,830.00.
Hong Kong’s Hang Seng index gained 1.6%, finishing at 24,721.10. China’s Shanghai Composite slipped 0.4% to 3,952.04. China’s government also reported that its economy grew at a 4.3% annualized rate during the April-June period, a significant slowdown from the 5% growth recorded in the first quarter.
Despite the positive inflation news, overall stock gains were held back by growing concerns that the United States and Iran could be heading toward a full-scale military conflict. Those fears have pushed oil prices upward. Investors are also awaiting spring earnings reports from a range of companies.
Renewed military exchanges between the two countries have heightened the risk of disruptions to oil and gas shipments through the Strait of Hormuz.
Tim Waterer, chief market analyst at KCM Trade, offered this assessment: “The U.S.-Iran Memorandum of Understanding signed last month has proved to be anything but. The two sides are once again exchanging military strikes, and they hold completely different views on the state of affairs in the Strait of Hormuz.”
Waterer added, “With shipping around the Gulf becoming increasingly fraught with danger, traffic flows are declining once more.”
In energy markets, benchmark U.S. crude oil rose 86 cents to $80.20 per barrel. Brent crude, the global benchmark, increased $1.15 to $85.88 per barrel.
Back on Wall Street, the S&P 500 gained 0.4%, closing at 7,543.59 and recovering part of the 0.8% drop it suffered the day before. The Dow Jones Industrial Average edged up less than 0.1% to 52,508.27, and the Nasdaq composite rose 0.9% to 26,107.01.
Stocks received a boost from falling bond yields, which declined after the inflation report revealed that American consumers paid 3.5% more for everyday goods — including gasoline and food — last month compared to a year ago.
Cooling inflation can reduce pressure on the Federal Reserve to raise interest rates. While higher rates are a tool to fight inflation, they also slow economic growth and drag down investment values across the board.
In the wake of the inflation report, traders placed less than a 17% chance on the Fed raising its benchmark interest rate at its upcoming meeting in a couple of weeks. A rebound in major technology stocks also helped stabilize the market. Micron Technology jumped 4.9% and Nvidia rose 4.1% — a turnaround after both stocks had been among the biggest drags on the S&P 500 the previous day, falling 4.4% and 3.5%, respectively.
In the bond market, the yield on the 10-year Treasury note fell to 4.58% from 4.62% the prior day, pausing a climb that had started from 3.97% before the conflict with Iran began.
In currency markets, the U.S. dollar slipped slightly to 162.16 Japanese yen from 162.19 yen. The euro rose to $1.1436 from $1.1425.
