BEIJING (AP) — Asian stock markets followed Wall Street higher Tuesday as inflation fears eased and investors regained an appetite for risk.
Market benchmarks in Shanghai, Tokyo, Hong Kong and Seoul advanced.
Overnight, Wall Street’s benchmark S&P 500 index rose 1%, recovering about half of last week’s losses. Gains were led by tech stocks.
Investors worry a global economic recovery might be hampered if rising inflation prompts governments and central banks to withdraw stimulus. But a Federal Reserve official helped to allay some of those fears when he said Tuesday the U.S. central bank shouldn’t look at changing policy in the midst of the coronavirus pandemic.
“U.S. markets delivered a positive start for the week, as easing inflation concerns drive a bounce in tech,” said Yeap Jun Rong of IG in a report.
The Shanghai Composite Index SHCOMP,
The Kospi 180721,
Stocks fell after hitting a record high May 7 amid growing concern higher inflation as economies revive would disrupt commerce or prompt governments to roll back stimulus spending and easy credit.
On Monday, the president of the St. Louis Federal Reserve Bank, James Bullard, told Yahoo Finance more inflation was “not really a surprise” and it wasn’t time to rethink monetary policy.
Fed officials said earlier the U.S. economy would be allowed to “run hot,” with inflation above the central bank’s 2% target, to ensure a recovery is established.
“I think there will come a time when we can talk more about changing the parameters of monetary policy,” Bullard said. “I don’t think we should do it when we’re still in the pandemic.”
The S&P 500 SPX,
The Dow Jones Industrial Average DJIA,
Nvidia NVDA,
Companies that rely on direct consumer spending made solid gains, while sectors that are viewed as safe havens such as utilities lagged.
Bond yields, or the difference between the market price and the payout at maturity, fell as prices rose. That often is taken as a sign investors are less concerned about inflation, which can erode the value of that payout.
On Friday, the Commerce Department releases one of its inflation gauges, the personal consumption and expenditures index, or Core PCE. The Fed prefers that tool to measure inflation, instead of the consumer price index released earlier in the month.
Economists surveyed by FactSet expect Core PCE to be up 3% from a year ago, which would be above the Fed target.
In energy markets, benchmark U.S. crude CL.1,
The dollar USDJPY,
Source: Marketwatch.com
