Asian Stocks Rise as Inflation Concerns Ease, PPI Exceeds Estimates

On Wednesday, Asian stocks continued their upward trend following a rally on Wall Street, with the Nasdaq composite index hitting a new record high. However, a recent report revealed that prices at the wholesale level in the US have remained persistently high, causing concerns about inflation. The Producer Price Index reading for April reached 0.5%, exceeding economists’ predictions. Nevertheless, markets showed optimism after Federal Reserve Chair Jerome Powell affirmed that the central bank would not likely increase interest rates in response to inflated prices. This decision was reiterated during a discussion in Amsterdam. The upcoming release of the US Consumer Price Index, scheduled for later in the day, is expected to reveal a decrease in inflation to 3.4% year-on-year in April, down from previous levels. In Asian trading, Japan’s Nikkei 225 rose by 0.1%, while Australia’s S&P/ASX 200 increased by 0.4%. The Shanghai Composite Index declined by 0.5%, but other markets, such as Taiwan’s Taiex and the SET in Thailand, saw gains. South Korean and Hong Kong markets were closed due to holidays. Bonds yields dropped, with the yield on the 10-year Treasury decreasing to 4.43% from 4.49% the previous day. As inflation continues to pose challenges, investors are becoming less confident in the pace and frequency of interest rate cuts this year, with predictions anticipating between one and two reductions. Tech stocks, including GameStop and AMC Entertainment, experienced an uptick in value during trading sessions, reminiscent of the social media-driven boom seen three years ago. Crude oil prices increased, with benchmark U.S. crude rising by 55 cents to reach $78.57 per barrel, and Brent crude increasing by 51 cents to reach $82.89 per barrel. The U.S. dollar weakened against the Japanese yen, dropping to 156.37 yen, compared to 156.42 yen the previous day. The euro also appreciated, costing $1.0826, up from $1.0820.