Asian markets experienced a surge on Wednesday, buoyed by a robust performance on Wall Street, which witnessed the Nasdaq composite index reaching a historic peak.
A report released on Tuesday revealed persistent high prices at the wholesale level in the United States, with the April producer price index surpassing forecasts at 0.5%.
Inflation rates have been on the rise throughout 2024, sparking concerns about the Federal Reserve’s ability to manage inflation within its 2% target.
Federal Reserve Chair Jerome Powell’s comments during a panel discussion in Amsterdam provided some reassurance to investors. Powell indicated the central bank’s reluctance to raise its key interest rate in response to persistent inflation, although he acknowledged dwindling confidence in inflation easing due to sustained price hikes in the initial months of the year.
The market’s focus now shifts to the U.S. monthly update on consumer prices, expected later on Wednesday. Economists anticipate a slight easing to 3.4% in April on a year-over-year basis for the consumer price index.
In Asian trading, Tokyo’s Nikkei 225 index climbed 0.4% to 38,491.15, while Australia’s S&P/ASX 200 advanced 0.4% to 7,760.40.
However, the Shanghai Composite index in China slipped 0.4% to 3,133.47 following the central bank’s decision to maintain a key lending rate unchanged, signaling Beijing’s commitment to monetary stability.
Elsewhere, Taiwan’s Taiex gained 1.4%, while Bangkok’s SET remained virtually unchanged.
Meanwhile, South Korean and Hong Kong markets were closed for a holiday.
On Tuesday, the S&P 500 index rose 0.5% to 5,246.68, and the Dow Jones Industrial Average increased 0.3% to 39,558.11.
The Nasdaq composite, largely influenced by technology stocks, surged 0.8% to 16,511.18, with the tech sector being a major contributor to broader market gains this year.
A resurgence in so-called “meme” stocks, including GameStop and AMC Entertainment, fueled a social media-driven frenzy reminiscent of three years ago. GameStop soared by 60.1%, while AMC rose by 32%, although both stocks retraced much of their earlier gains.
Bond yields saw a slight decline, with the yield on the 10-year Treasury slipping to 4.44% from 4.49% late Monday.
Investor expectations for the frequency and pace of interest rate adjustments have tempered amidst higher-than-anticipated inflation. Data from CME Group indicates traders are banking on one or two rate cuts this year.
Wall Street remains optimistic about the Federal Reserve achieving a “soft landing,” where elevated interest rates cool inflation without triggering a recession. While the economy retains its strength, consumer fatigue due to persistent inflation could be emerging, as suggested by expectations of softened consumer spending in April, as indicated in Wednesday’s retail sales report.
In other trading, benchmark U.S. crude added 72 cents to reach $78.74 a barrel on the New York Mercantile Exchange in electronic trading. Brent crude, the international benchmark, rose by 65 cents to $83.03 a barrel.
In currency markets, the U.S. dollar slipped marginally to 156.38 Japanese yen from 156.42 yen, while the euro edged up to $1.0824 from $1.0820.
