Asian shares rally as modest inflation eases rate hike fears

Asian stock markets rallied on Friday, tracing gains on Wall Street after weaker than expected inflation figures soothed concerns about a possible acceleration of interest rate hikes. Oil prices were hovering near a fresh multiyear high.

KEEPING SCORE: Japan’s benchmark Nikkei 225 rose 1.2 percent to 22,758.48 and South Korea’s Kospi added 0.6 percent to 2,477.71. Hong Kong’s Hang Seng jumped 1.0 percent to 31,101.44 and the Shanghai Composite slipped less than 0.1 percent to 3,173.53. Australia’s S&P/ASX 200 was practically unchanged at 6,118.60. Indexes in Taiwan’s and Southeast Asia also were higher.

INFLATION: U.S. consumer prices rose a modest 0.2 percent in April, indicating that that broader inflation pressure in the world’s No. 1 economy remains muted. Slower growth in core prices may relieve pressure on the Federal Reserve to accelerate interest rate hikes. The U.S. central bank is expected to lift rates three times this year, but some analysts believe an uptick in inflation or economic growth might spur the Fed to add another hike. Other releases on Thursday added to signs of tempered global inflation: Chinese consumer prices rose 1.8 percent in April, slower than the previous month’s 2.1 percent, while the Bank of England held off on raising rates, citing weaker than expected price growth.

MARKET INSIGHT: “While inflation is continuing to trend up it’s only happening slowly. So Goldilocks continues,” said Shane Oliver, head of investment strategy at AMP Capital. The Fed will keep “normalizing, but for now it can remain gradual, with the next hike still on track for June.”

SINGAPORE MEETING: Geopolitical uncertainty eased after news that a highly anticipated meeting between President Donald Trump and North Korean leader Kim Jong Un will happen June 12 in Singapore. The confirmation follows the return of three Americans held by Kim’s government.

WALL STREET: Major U.S. benchmarks finished with solid gains for a second day. The S&P 500 index rose 0.9 percent to 2,723.07. The Dow Jones industrial average climbed 0.8 percent to 24,739.53. The Nasdaq added 0.9 percent to 7,404.97.

ENERGY: Oil futures slipped after hitting their highest level since 2014 as President Donald Trump’s decision this week to re-impose sanctions Iran, the world’s fifth-biggest oil producer, reverberated. Benchmark U.S. crude oil dipped 7 cents to $71.39 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 22 cents to settle at $71.36 a barrel on Thursday. Brent crude, used to price international oils, lost 17 cents to $77.30 per barrel.

CURRENCIES: The dollar rose to 109.40 from 109.39 yen. The euro slipped to $1.1897 from $1.1916 in late trading Thursday.