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Asian shares track Wall Street gains on cooling inflation

BANGKOK –

Shares rose on Thursday in Asia after benchmarks closed at a three-month high on Wall Street as investors welcomed a report that inflation cooled more than expected for the month. Seven.

Hong Kong, Shanghai and Seoul rose more than 1%. Tokyo is closed for a holiday. US futures edged higher, while oil prices fell.

The government said on Wednesday that consumer inflation rose 8.5% in July from a year earlier. But that was down from June’s four-decade high of 9.1%.

The S&P 500 index rose 2.1% on expectations that slower inflation would mean the Federal Reserve could adjust interest rate hikes. Tech stocks, crypto and other investments were among the biggest losers of the year as the Fed’s aggressive interest rate hikes took the lead.

Hong Kong’s Hang Seng index rose 1.9% to 19,982.20 while the Shanghai Composite index gained 1.2% to 3,268.02. Kospi in Seoul rose 1.3% to 2,513.22 and Taiwan’s Taiex rose 1.5%.

In Thailand, the SET gained 0.4% after the country’s central bank raised its benchmark interest rate by 0.25 percentage points to 0.75% a day earlier. The Southeast Asian country’s economy has been hit hard by the pandemic, which has devastated the country’s vital tourism industry.

On Wall Street, the S&P 500 rose 87.77 points to 4,210.24, touching its highest level since early May. It is now nearly 15% higher than its mid-June low.

The Nasdaq composite, which has many high-growth and expensive-looking stocks that are particularly vulnerable to interest rates, rose 2.9% to 12,854.80. It is up more than 20% from June.

The Dow Jones Industrial Average rose 1.6% to 33,309.51.

Tech stocks, crypto, and other investments that were hit the hardest of the year were among the biggest winners of the day. Bitcoin rose 2.2% to just under $24,000.

Lower gasoline and oil prices helped curb inflation in July. But excluding that and fluctuating food prices, so-called “core inflation” held steady last month, at 5.9%, rather than accelerating as economists had forecast.

The data encouraged traders to scale back their bets on how much the Fed will raise rates at its next meeting. Interest rates help set prices across financial markets, and higher rates tend to drag prices down on everything from stocks to commodities to cryptocurrencies.

Other reports this week will show how inflation is doing at wholesale levels and whether US households continue to lower expectations for upcoming inflation, an influential data point. for Fed officials.

Bond prices spiked shortly after the release of the inflation report, dragging their yields lower. Yields on two-year Treasuries, which tend to track expectations for the Fed, fell to 3.19% from 3.27% late Tuesday.

The 10-year yield fell initially, but then stabilized in trading. It edged higher to 2.79% from 2.78% late Tuesday. It’s still well below the two-year yield, and many investors see the gap as a pretty reliable signal of an upcoming recession.

Recession worries were built as the highest inflation in 40 years squeezed households and corporations around the world. Wall Street is watching closely to see if the Fed can successfully put the brakes on the economy and cool down inflation without turning into a recession.

The Federal Reserve will receive a few more highly anticipated reports before its next interest rate announcement, on September 21. They may also change their stance. These include data on hiring trends across the economy, due September 2, and the next update on consumer inflation, due September 13.

In other trading, benchmark US crude fell 15 cents to $91.78 a barrel in electronic trading on the New York Mercantile Exchange. It rose $1.43 to $91.93 on Wednesday.

Brent crude, the basis for international pricing, lost 10 cents to $97.30.

The US dollar rose to 133.20 Japanese yen from 132.93 yen late Wednesday. The euro fell to $1.0288 from $1.0300.

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AP Business Writers Stan Choe and Damian J. Troise contributed.

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