Stock Market Update: Asian Shares Mostly Increase Ahead of U.S. Inflation Report
Asian shares rose on Friday as traders anticipated a crucial U.S. inflation report that could impact the Federal Reserve’s decisions on interest rates. Japan’s Nikkei 225 climbed 0.9% to 39,711.93, Australia’s S&P/ASX 200 increased 0.6% to 7,803.50, South Korea’s Kospi edged up 0.3% to 2,790.97, Hong Kong’s Hang Seng added 0.8% to 17,860.79, and the Shanghai Composite surged 1.0% to 2,976.26. Japan’s government reported an unchanged unemployment rate of 2.6% in May.
On Wall Street, the S&P 500 saw a slight gain of 0.1%, hovering near its all-time high from the previous week. The Nasdaq composite rose 0.3%, remaining just below its record high, while the Dow Jones Industrial Average closed 0.1% higher. Gains in retailers and communications services offset losses in consumer goods, financial stocks, and other sectors. Amazon.com rose 2.2% and Meta Platforms added 1.3%. However, Walgreens Boots Alliance plummeted 22.2% after reporting disappointing results and lowering its outlook, and Levi Strauss sank 15.4% due to underwhelming revenue results and earnings forecast. McCormick saw a 4.3% rise after exceeding earnings expectations, while Micron Technology fell 7.1% after a disappointing forecast.
Treasury yields declined, with the 10-year Treasury yield falling to 4.28% from 4.33%, and the two-year Treasury yield dropping to 4.71% from 4.75%. The stock market remained subdued ahead of Friday’s government inflation report. Economists expect the personal consumption expenditures index (PCE), the Fed’s preferred inflation measure, to show a slight decrease to 2.6% in May from 2.7% in April, significantly down from the 7.1% peak in 2022. This report could influence the Fed’s decision on when to start cutting interest rates, which are at their highest level in over 20 years.
An updated government report indicated the U.S. economy grew at a 1.4% annual pace from January to March, slightly revised from 1.3%, marking the slowest growth since spring 2022. Consumer spending grew at a 1.5% rate, down from the initial 2% estimate, indicating consumers are being squeezed by inflation and high interest rates. While the slowdown in consumer spending could ease inflation, excessive slowing could harm the economy. The S&P 500 is on track for its fourth consecutive winning week, up nearly 4% in June and about 15% for the year. The S&P 500 rose 4.97 points to 5,482.87, the Dow added 36.26 points to 39,164.06, and the Nasdaq gained 53.53 points to close at 17,858.68.