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Asian markets rise ahead of US inflation data

BEIJING (AP) – Asian stock markets gained while Europe opened lower yesterday ahead of the United States (US) inflation data that some investors worry might lead to more interest rate hikes.

Wall Street futures were lower. Oil prices rose USD1 per barrel, rebounding from Tuesday’s plunge.

Investors were waiting for US data on June consumer prices amid concern that global central bank action to cool surging inflation might derail economic growth.

Strong US inflation “may cement the case” for the Federal Reserve to tighten policy, but traders might choose to “buy into the stance of peaking inflation” as oil prices fall, Yeap Jun Rong of IG said in a report.

In early trading, the FTSE 100 in London lost 1.2 per cent to 7,119.53. The DAX in Frankfurt sank 1.3 per cent to 12,741.09 and the CAC 40 in Paris shed 1.1 per cent to 5,979.84.

On Wall Street, futures for the benchmark S&P 500 index and the Dow Jones Industrial Average were off less than 0.1 per cent.

The S&P 500 lost 0.9 per cent on Tuesday, declining for a third day.

Currency traders at the KEB Hana Bank headquarters in Seoul. PHOTO: AP

Technology, healthcare and energy stocks accounted for a big share of losses.

The Dow Jones Industrial Average slid 0.6 per cent and the Nasdaq composite shed 0.9 per cent.

In Asian trading, the Shanghai Composite Index gained less than 0.1 per cent to 3,284.29 after June exports surged 17.9 per cent and imports rose just one per cent in a sign of weak demand.

Tokyo’s Nikkei 225 added 0.5 per cent to 25,478.77 while the Hang Seng in Hong Kong sank 0.2 per cent to 20,797.95.

The Kospi in Seoul added 0.5 per cent to 2,328.61 after the South Korean central bank raised its policy rate by an unprecedented margin of 0.5 percentage points to 2.25 per cent to cool rising prices.

Sydney’s S&P-ASX 200 gained 0.2 per cent to 6,621.60 and India’s Sensex advanced 0.6 per cent to 53,591.66.

New Zealand advanced after the country’s central bank lifted its benchmark interest rate by half a percentage point to 2.5 per cent. Southeast Asian markets declined.

Big US companies are due to report second-quarter results over the next few weeks.

Expectations appear subdued. Analysts are forecasting 5.1 per cent growth for companies across the S&P 500, which would be the weakest since the end of 2020, according to FactSet.

US inflation jumped as the economy recovered from the coronavirus pandemic.

Russia’s invasion of Ukraine pushed up prices of oil and other commodities. Global manufacturing supply chains were disrupted by Chinese efforts to contain virus outbreaks that temporarily shut down Shanghai and other industrial centres.

The US bond market is flashing warning signals of a possible recession.

The yield on the 10-year Treasury, or the difference between the market price and the payout at maturity, was steady at 2.98 per cent. It is below the two-year Treasury yield, which indicates some investors expect a recession in the next year or two.

In energy markets, benchmark US crude gained USD1 to USD99.84 per barrel in electronic trading on the New York Mercantile Exchange. The contract plunged USD8.25 on Tuesday to USD95.84. Brent crude, the price basis for international trading, climbed USD1.02 to USD100.51 per barrel in London. It fell USD7.61 the previous session.

The dollar rose to JPY137.14 from Tuesday’s JPY136.77. The euro edged down to USD1.0035 from USD1.0045.