Asian shares mostly gain amid cautious relief over US-China agreement

Tokyo, May 14 (AP) Asian shares were mostly higher Wednesday as a cautious sense of relief spread through regional markets after the US and China agreed to a 90-day pause in their trade war.

Japan's benchmark Nikkei 225 lost 0.8 per cent to 37,874.59. Australia's S&P/ASX 200 shed 0.1 per cent to 8,260.40.

South Korea's Kospi surged 1.1 per cent to 2,635.86. Hong Kong's Hang Seng jumped 1.1 per cent to 23,367.57, while the Shanghai Composite gained 0.1 per cent to 3,377.75.

The relief over the trade truce between the US and China is tepid among global businesses and investors given uncertainty over how long it might last and where tariffs might go in the months ahead.

“In the absence of a lasting deal, uncertainty over where tariff rates will settle and the impact of those already implemented will remain key factors in our macroeconomic forecasts,” said Brian Coulton, chief economist at Fitch Ratings.

A report overnight that showed US inflation unexpectedly slowed last month helped drive buying that pushed the S&P 500 up 0.7 per cent, to 5,886.55. The Dow Jones Industrial Average fell 0.6 per cent to 42,140.43, and the Nasdaq composite climbed 1.6 per cent to 19,010.08.

The S&P 500 fell nearly 20 per cent below its record last month, but has since recovered on hopes that President Donald Trump will ease his stiff tariffs on trading partners worldwide before they create a recession and send inflation spiking higher.

The S&P 500, which sits at the centre of many 401(k) accounts, is back within 4.2 per cent of its all-time high set in February and positive again for the year so far.

Tuesday's report said that even with all the uncertainty around trade, and even with many businesses rushing to import products from other countries before tariffs raise their prices, inflation slowed to 2.3 per cent last month from 2.4 per cent in March.

Such data pulls the economy further from a worst-case scenario called “stagflation,” where the economy stagnates but inflation remains high. The Federal Reserve has no good way to fix that toxic combination. It could try to lower rates to help the economy, for example, but that would likely worsen inflation in the short term.

Even with Tuesday's encouraging report, economists and analysts say inflation may still run higher in coming months because of Trump's tariffs. That will likely leave the Fed waiting for more data to guide their decision on whether and when to cut interest rates in order to help the economy.

It's similar to the wait that investors in general are enduring. With the Fed set to make no moves on interest rates for the time being, markets will likely trade “with negotiation and reconciliation headlines,” according to Alexandra Wilson-Elizondo, global co-head and co-chief investment officer of multi-asset solutions within Goldman Sachs Asset Management.

On Wall Street, stocks in the artificial-intelligence industry were strong. Nvidia rose 5.6 per cent and was the biggest single force pushing upward on the S&P 500. It's partnering with Saudi Arabia's sovereign wealth fund-owned AI startup Humain to ship 18,000 chips to the Middle Eastern nation to help power a new data centre project.

In the bond market, Treasury yields ticked higher with hopes for the US economy. The yield on the 10-year Treasury rose to 4.48 per cent from 4.45 per cent late Monday.

The two-year Treasury yield, which moves more closely with expectations for Fed action, ticked up to 4.01 per cent from 3.98 per cent.

In energy trading, benchmark US crude fell 44 cents to USD 63.23 a barrel. Brent crude, the international standard, declined 46 cents to USD 66.17 a barrel.

In currency trading, the US dollar edged down to 147.16 Japanese Yen from 147.21 Yen. The Euro cost USD 1.1192, up from USD 1.1188. (AP) NPK NPK

Source: PTI