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Asia markets higher ahead of US inflation, Fed rates decision

BEIJING (AP) — Asian stock markets were mostly higher on Tuesday ahead of a United States (US) inflation update and a US Federal Reserve (Fed) decision on another possible interest rate hike.

A person looks at an electronic stock board showing Japan’s Nikkei 225 and New York Dow indexes at a securities firm on June 13 in Tokyo. PHOTO: AP

Shanghai declined while Tokyo and Hong Kong advanced. Oil prices rebounded from Monday’s plunge.

Wall Street’s benchmark S&P 500 index rose 0.9 per cent to a 14-month high ahead of the release of US inflation figure on Tuesday. Forecasters expect it to show inflation eased in May but still was double the Fed’s two per cent target despite interest rate hikes to cool business activity.

Traders hope the Fed will skip another rate increase when its monthly board meeting ends Wednesday, but that might be complicated if inflation is higher than expected. Central banks in Europe and Japan also are due to meet this week to discuss possible rate hikes.

The Fed’s benchmark lending rate is at a 16-year high, which has led to a contraction in manufacturing activity and three high-profile bank failures.

“The bull market rally looks like it doesn’t want to stop,” said Edward Moya of Oanda in a report. “Wall Street appears confident that the Fed will not be delivering its 11th straight rate hike this week.”

The Shanghai Composite Index lost less than 0.1 per cent to 3,227.57 after China’s central bank lowered its one-week lending rate for the first time since last summer. That appeared to reflect official concern about the health of China’s economic recovery after growth in factory and consumer activity weakened.

The Nikkei 225 in Tokyo surged 1.8 per cent to 33,018.65 and the Hang Seng in Hong Kong advanced 0.5 per cent to 19,495.06.

The Kospi in South Korea added 0.2 per cent to 2,635.28 and Sydney’s S&P-ASX 200 was 0.2 per cent higher at 7,135.30.

New Zealand, Bangkok and Indonesia advanced. Singapore declined.

On Wall Street, the S&P 500 rose Monday to 4,338.93 and its highest close since April 2022.

The Dow Jones Industrial Average gained 0.6% to 34,066.33. The Nasdaq composite rallied 1.5 per cent to 13,461.92.

High-growth stocks, seen by investors as some of the biggest beneficiaries of lower rates, led the market Monday. Tech stocks alone accounted for more than half the S&P 500’s gain, powered by gains of at least 1.5 per cent for both Microsoft and Apple.

Forecasters expect Tuesday’s inflation update to show consumer prices rose 4.1 per cent over a year earlier last month. That would be down from April’s 4.9 per cent and last June’s peak above nine per cent but more than double the Fed target of two per cent.

Two Fed board members have said the Fed should hold off on a rate increase this week while it gathers data on the impact of previous hikes.

On Monday, Switzerland’s UBS said it has completed its takeover of rival Credit Suisse in a government-arranged rescue combining the country’s two largest banks.

In energy markets, benchmark US crude rose 26 cents to USD67.38 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell USD3.05 on Monday to USD67.12. Brent crude, the price basis for international oil trade, gained 43 cents to USD72.27 per barrel in London. It lost USD2.95 the previous session to USD71.84.

The dollar declined to 139.52 yen from Monday’s 139.62 yen. The euro advanced to USD1.0796 from USD1.0756.