Asian shares gain as U.S. inflation data not as bad as feared

div classBodysc17zpet90 cdBBJodivpBy Alun Johnp

pHONG KONG Reuters – Asian shares rose on Wednesday boosted by U.S. inflation figures that fared better than markets worst expectations – and caused U.S. yields to pause their march higher – though Chinese shares remained pressured by COVID19. pdivdivdiv classBodysc17zpet90 cdBBJodiv

pShare market sentiment was also capped by gains in oil and other commodity prices after Russian President Vladimir Putin said that onandoff peace negotiations “have again returned to a deadend situation for us”, which also hurt the euro.p

pMSCI‘s broadest index of AsiaPacific shares outside Japan rose 0.5 and Japan’s Nikkei jumped 1.54.p

pS&P500 futures gained 0.2 and Nasdaq futures gained 0.57 in Asia trade.p

pData published on Tuesday showed U.S. monthly consumer prices increased by the most in 1612 years in March as war in Ukraine boosted the cost of gasoline to record highs, cementing the case for a 50 basis points interest rate hike from the Federal Reserve next month.p

pHowever, monthly underlying inflation pressures moderated as goods prices, excluding food and energy, dropped by the most in two years.p

pThe inflation data sent U.S. yields lower on Tuesday snapping seven straight sessions of gains, though they regained a little ground late in the day and into early trade on Wednesday. p

pThe yield on 10year Treasury notes was at 2.7498, compared to an over three year peak of 2.836, before the inflation data.p

pThe two year yield was 2.4362.p

pThe moves in yields “gave a nod to the rhetoric that U.S. inflation has likely peaked or is very close to it,” said Clara Cheong, a strategist at JPMorgan Asset Management. p

p“While this is unlikely to change the trajectory of the Fed from hiking 50 basis points in May, if inflation continues on this path there will be less pressure on them to be overly aggressive in the second half of the year.” p

p“However equity markets gave back gains as oil rose back above 100 barrel as progress in RussiaUkraine peace talks came to a standstill and China started reopening Shanghai very gradually.” p

pBrent crude briefly dropped below 100 earlier this week, but rallied sharply on Tuesday, and gains continued into Wednesday trade. p

pBrent crude futures gained 0.38 on Wednesday to 105.09 and U.S. West Texas Intermediate rose 0.55 to 101.12. p

pCommodities analysts at CBA attributed the gains in oil to Putins statement, which also caused agricultural commodities to gain, as “the already small risk that Black Sea supplies might normalise to any degree through mid‑year is likely down to zero.” p

pCorn futures rose to a one month high and wheat futures reached a three week peak. p

pChinese share markets gave back their gains from Tuesday afternoon when tourism and consumer goods stocks had jumped on reports that COVID19 curbs could be eased in some pilot areas. p

pChinese blue chips fell 0.7 and Hong Kong lost 0.2. They were little changed by Wednesday customs data which showed Chinas exports rose 13.4 in yuan terms year on year in JanuaryMarch, while imports increased 7.5.p

pChina reported 26,525 new asymptomatic coronavirus cases and 1,513 symptomatic ones on Wednesday. p

pPutins remarks were a major driver of currency markets with the euro pinned to a fiveweek low on and commodity currencies finding support as oil prices rose. [FRX] p

pThe New Zealand dollar was at 0.6873 up 0.33, after the Reserve Bank of New Zealand raised interest rates by a chunky 50 basis points. It briefly rose as high as 0.6901 p

pSpot gold edged 0.1 higher to 1,968 an ounce. [GOL]p

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pp Reporting by Alun John Editing by Christopher Cushingp

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