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Asian stocks mixed after US inflation jumped 5% in May

BANGKOK (AP) – Stocks were mostly higher in Asia on Friday after the S&P 500 index hit a new record despite a surge in consumer prices in the United States in May.

Shanghai fell, Tokyo was largely unchanged, while stocks rose in Hong Kong, Seoul and Sydney. US futures were slightly lower.

On Thursday, Wall Street posted gains as bond yields mostly fell despite the highly anticipated report showing consumer prices rose 5% in May, the biggest year-over-year increase since 2008 and more than economists expected.

Investors have also responded positively to more data showing continued improvement in the labor market.

The concern is that if signs of inflation persist, central banks may withdraw stimulus measures in the economy to ease price pressures.

But investors continue to buy into the Federal Reserve’s position that the current inflation surge is transient, OANDA’s Jeffrey Halley said.

“Financial markets have long elevated the selective use of facts to an art form,” Halley said in a report. “Although inflation measures in the United States rose again and slightly above expectations, actual increases were lower than those recorded in April.”

Taking all the factors into account, “that was all the street needed to get back to their happy place to buy everything.”

In Asia, where Sino-US tensions are among the many factors weighing on morale, the mood was less hot.

Tokyo’s Nikkei 225 index was unchanged at 28,948.73, while the Hong Kong Hang Seng rose 0.4% to 28,847.02. The Seoul Kospi gained 0.8% to 3,249.32, while the Shanghai Composite Index slipped 0.5% to 3,593.20.

The Indian Sensex gained 0.3%.

On Thursday, the S&P 500 gained 0.5% to 4,239.18, just breaking its previous all-time high on May 7. The Dow Jones Industrial Average edged up 0.1% to 34,466.24. The Nasdaq Composite rose 0.8%, to 14,020.33, as smaller company stocks lagged the broader market. The Russell 2000 Index fell 0.7% to 2,311.41.

A significant portion of the consumer price hike in May was linked to used car sales, which is largely attributed to purchases made by car rental companies who are bolstering their fleets as people resume their trips.

Bond yields first rose after the inflation data, then fell broadly in the late afternoon. The yield on the 10-year Treasury bill slipped to 1.43% from 1.45% Thursday night.

Stocks meandered through the week as investors waited for the inflation update.

Investors will be able to see next week how the Fed reads the latest inflation barometer and what monetary policy changes, if any, the central bank may be considering. The Fed’s policy-making committee is due to release its latest update on economic policy and interest rates next Wednesday.

Markets will also be tuned this weekend to any development at the top of the Group of Seven in Britain. At the top of leaders’ agendas, helping countries recover from the coronavirus pandemic, which has killed more than 3.7 million people and destroyed economies.

G-7 leaders meet for three days at a British seaside resort. It is the first such gathering since before the pandemic.

In other exchanges, benchmark US crude oil fell 7 cents to $ 70.22 per barrel in electronic trading on the New York Mercantile Exchange. It gained 33 cents to $ 70.29 a barrel on Thursday.

Brent crude, the international standard, fell 5 cents to $ 72.47 a barrel.

The US dollar was trading at 109.39 Japanese yen, against 109.42 yen. The euro fell from $ 1.2176 to $ 1.2184.

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