TOKYO – Asian shares were mostly higher on Friday after Wall Street drifted to a mixed close.
Tokyo’s benchmark extended its New Year's rally, trading well above 35,000 and at its highest level since 1990. U.S. futures were nearly unchanged and oil prices surged.
Recommended Videos
On Thursday, a U.S. inflation report forced some investors to push back forecasts for when the Federal Reserve will deliver long-sought cuts to interest rates. But markets in Asia breezed past those concerns.
Tokyo's Nikkei 225 gained 1.1% to 35,422.95. The Hang Seng in Hong Kong edged 0.1% higher to 16,319.97 and the Shanghai Composite index advanced 0.4% to 2,898.03.
The Kospi in South Korea slipped 0.1% to 2,537.17, while Australia's S&P/ASX 200 also edged 0.1% lower, to 7,501.40.
Shares rose in Taiwan on the eve of a presidential election. Markets in India and Thailand also were higher.
On Thursday, Wall Street wobbled after the update on inflation raised questions about when the Federal Reserve could begin the cuts to interest rates that investors crave so much.
The S&P 500 slipped 0.1% to 4,780.24. The Dow Jones Industrial Average rose less than 0.1%, to 37,711.02, and the Nasdaq composite edged up by less than 0.1% to 14,970.19.
Stocks had been roaring toward record heights on expectations that a cooldown in inflation would convince the Federal Reserve to cut interest rates sharply in 2024, which would boost prices for investments. Thursday morning’s inflation report showed U.S. consumers paid prices that were 3.4% higher overall in December than a year earlier. That’s an acceleration from November’s 3.1% inflation rate and a touch warmer than economists expected.
But trends underneath the surface may have been a bit more encouraging. After stripping out food and fuel prices, which can shift sharply from month to month, the rise in prices from November into December was close to economists’ expectations.
The inflation data sent Treasury yields on a jagged run in the bond market. After sinking from Wednesday night into Thursday, they jumped immediately after the report's release as traders trimmed bets for the first rate cuts to arrive as soon as March.
But yields quickly began yo-yoing afterward. By late afternoon, they were lower again and helping stock indexes to recover much of their earlier losses.
The yield on the 10-year Treasury slipped to 3.97% from 4.04% late Wednesday. It's down from more than 5% in October.
Economists at Bank of America said they're sticking with their forecast for the Fed to begin cutting rates in March, despite the warmer-than-expected inflation data. Some of the drivers of the recent strength, particularly used cars, should fade in coming months, they said in a BofA Global Research report.
A jump in oil prices put some upward pressure on inflation and yields, as they trimmed their sharp losses from earlier in the week.
Early Friday, a barrel of benchmark U.S. crude was up $1.66 at $73.68, a 2.4% jump. It rose 65 cents to $72.02 on Thursday. Brent crude, the international standard, gained $1.28 to $78.01 per barrel.
In the energy industry, natural-gas producer Chesapeake Energy rose 3.2% after it agreed to sell itself to Southwestern Energy in an all-stock deal valued at $7.4 billion. Southwestern fell 2.5%.
Elsewhere on Wall Street, Citigroup lost 1.8% after it detailed a list of charges it will take against its fourth-quarter results, related to everything from Argentina's troubled economy to a previously disclosed special assessment by the Federal Deposit Insurance Corp.
Hertz Global Holdings sank 4.3% after it said it expects to record a drop in the fourth quarter for an underlying measure of profits, and it's selling about 20,000 electric vehicles to cut its EV fleet by a third.
In currency dealings, the U.S. dollar was at 145.13 Japanese yen, down from 145.74. The euro slipped to $1.0980 from $1.0982.
___
AP Business Writer Stan Choe contributed.