Tokyo, May 13 (BNA): Asian shares rebounded on Friday from losses earlier in the week, ignoring data showing wholesale prices in the United States rose 11% in April from a year earlier.
The regional rally came on the heels of a mixed and silent shutdown on Wall Street. Oil prices and US futures also rose, according to the Associated Press.
Investors are confused about the next move regarding inflation and the US central bank’s response to it.
Trading was choppy, with indices subject to sharp fluctuations as investors try to protect their portfolios from the impact of the highest inflation rate in decades.
After winning the Senate for a second four-year term, Federal Reserve Chairman Jerome Powell acknowledged for the first time on Thursday that high inflation and weakness in other economies could thwart his efforts to avoid a recession.
Powell previously sought to portray the Fed’s efforts to tighten interest rates as consistent with the so-called “soft landing” of the economy.
Hong Kong’s Hang Seng rose 2.2% to 198805.34 and Tokyo’s Nikkei 225 climbed 2.8% to 26,461.49. South Korea’s Kospi rose 1.7% to 2594.95 and in Sydney, the S&P/ASX 200 advanced 1.5% to 7,046.50.
The central bank is moving to fight rising prices by raising interest rates, and pulling some currencies lower while the dollar is rising.
The Japanese yen has weakened sharply in the past several months, while the Chinese yuan, whose value is subject to other currencies, has weakened.
The dollar traded at 128.96 yen, up from 128.42 yen. Against the Chinese yuan, it was at 6.79 per dollar, up from about 6.41 yuan a month ago.
On Thursday, the S&P 500 index closed 0.1% lower at 3,930.08 after having been down 1.9% earlier in the day. The Dow Jones Industrial Average fell 0.3 percent to 31,730.30, while the Nasdaq rose 0.1 percent to 11,370.96.
Indices are on track for sharp weekly declines, extending the market’s slump so far this year. The S&P 500 is now down 17.5% this year, while the Nasdaq is down 27.3%.
Stocks of smaller companies have held out much better than the rest of the market. The Russell 2000 index rose 1.2% to 1739.38.
Another dire inflation reading sparked a sell-off early Thursday, as technology stocks weighed the most on the S&P 500.
The Labor Department’s report that wholesale prices rose 11% in April from a year earlier adds to concerns that manufacturing costs are being passed on to consumers, who may hold back from spending, hampering economic growth.
On Wednesday, the Labor Department’s report on consumer prices came out hotter than Wall Street expected, showing a larger-than-expected increase in prices outside of food and gasoline. Core inflation can be more predictive of future trends.
The effect of higher prices on consumers has been global. Britain said on Thursday that its economy grew at the slowest pace in a year during the first quarter. This raises fears that the country may be heading into a recession.
In other trading, the price of US crude oil rose $1.21 to $107.34 a barrel in electronic trading on the New York Mercantile Exchange. It rose 42 cents to $106.13 a barrel on Thursday.
Brent crude, the pricing basis for international trade in crude oil, rose $1.45 to $108.90 a barrel.
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