Asian shares started June with big gains on Monday after a report showing US inflation is not worsening sparked a rally on Wall Street.
Hong Kong’s Hang Seng led the region’s gains, rising 2.7% to 18,560.98, while the Shanghai Composite index rose 0.3% to 3,095.63.
The Nikkei 225 in Tokyo rose 0.9% to 38,849.65, while the Kospi in Seoul rose 1.9% to 2,687.11.
Australia’s S&P/ASX 200 climbed 0.7% to 7,756.80.
In Taiwan, the Taiex rose 1.9%.
On Friday, the S&P 500 rose 0.8% to complete its sixth winning month in the last seven, ending at 5,277.51. The Dow Jones rose 1.5% to 38,686.32, and the Nasdaq fell less than 0.1% to 16,735.02.
The gap rose to one of the market’s biggest gains, 28.6%, after stronger earnings and revenue for the latest quarter than analysts expected. The retailer also raised its expectations for sales and profitability this year, despite the fact that the outlook for the economy remains uncertain.
Equities were broadly boosted by the easing of government bond yields in the bond market after the latest inflation figures came in about as expected at 2.7% last month.
That could boost the Federal Reserve’s confidence that inflation is on a sustainable path toward its 2% target, something the Federal Reserve says it needs before cutting its key interest rate.
Friday’s report from the US government also showed that consumer spending growth had weakened more than economists expected. Income growth for Americans also slowed last month.
“Finally, US economic data is starting to show clear signs that consumers are feeling the pressure. With savings drying up, prices skyrocketing, the labor market cooling, disposable incomes taking a hit and interest rates still high, spending in 2022 will become impossible. It’s like trying to fill a bucket with a hole in it: good luck keeping it full,” said Stephen Innes of SPI Asset Management in a commentary.
The Fed is keeping the Fed at its highest level in more than two decades, hoping to slow the economy enough to quell high inflation. But if interest rates are kept too high for too long, it could slow the growth of the economy and cause a recession that throws workers out of their jobs and hurts profits for companies.
The yield on the 10-year government bond fell from 4.55% at the end of Thursday to 4.50% on Friday. Earlier this week, it rose above 4.60% on concerns about tepid demand following some government bond auctions, a move that had hurt stocks.
Almost no one expects the Federal Reserve to cut rates at its next meeting in a week and a half, but most expect the Fed to cut rates at least once by the end of the year, according to data from the CME Group.
Dell fell 17.9%, even though it matched analysts’ earnings expectations for the latest quarter. The stock price had already risen 122% in 2024 before the report, meaning expectations were very high, and analysts pointed to concerns about the amount of profit Dell is squeezing out of every $1 of sales.
Nvidia fell for the second day in a row, losing 0.8%, as momentum finally slows after rising more than 20% since last week’s huge earnings report.
Trump Media & Technology Group fell 5.3% in early trading after Donald Trump’s conviction on felony charges Thursday. The company, which operates the Truth Social platform, had previously warned in filings with US securities regulators about the possible consequences of a conviction.
MongoDB fell 23.9% despite high profit and revenue expectations. The developer database company provided profit forecasts for the current quarter, which fell short of analyst expectations for the full year.
In other trades early Monday, U.S. benchmark crude gained 46 cents to $77.45 a barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, the international standard, rose 46 cents to $81.57 after OPEC agreed this weekend to maintain production cuts that have supported prices.
The US dollar fell from 157.26 yen to 157.13 Japanese yen. The euro rose from $1.0848 to $1.855.
