BEIJING (AP) – Asian stock markets were mostly higher on Tuesday ahead of a U.S. inflation update and the Federal Reserve’s decision on another possible interest rate hike.
Shanghai declined while Tokyo and Hong Kong advanced. Oil prices have rebounded after Monday’s fall.
Wall Street’s benchmark S&P 500 index rose 0.9% to a 14-month high ahead of the release of US inflation data on Tuesday. It was more than double the Fed’s 2% target despite forecasters expecting inflation to ease in May, despite raising interest rates to calm business activity.
Traders expect the Fed to rule out another rate hike when its monthly board meeting ends on Wednesday, but that could be complicated if inflation turns out to be higher than expected. Central banks in Europe and Japan are also due to meet this week to discuss possible rate hikes.
The Fed’s benchmark lending rate is at a 16-year high, which has led to a contraction in manufacturing activity and three high-profile bank failures.
“The bull market rally looks like it doesn’t want to stop,” Edward Moya of OANDA said in a report. “Wall Street appears confident that the Fed will not make its 11th straight rate hike this week.”
The Shanghai Composite index ended less than 0.1% at 3,227.57 after China’s central bank lowered its one-week lending rate for the first time since last summer. That appears to reflect official concern about the health of China’s economic recovery after slowing factory growth and weakening consumer activity.
The Nikkei 225 rose 1.8% to 33,018.65 in Tokyo and the Hang Seng rose 0.5% to 19,495.06 in Hong Kong.
The Kospi in South Korea was up 0.2% at 2,635.28 and Sydney’s S&P-ASX 200 was up 0.2% at 7,135.30.
New Zealand, Bangkok and Indonesia progressed. Singapore declined.
On Wall Street, the S&P 500 rose to 4,338.93 on Monday, its highest since April 2022.
The Dow Jones Industrial Average rose 0.6% to 34,066.33. The Nasdaq Composite closed up 1.5% at 13,461.92.
High-growth stocks, seen by investors as some of the biggest beneficiaries of lower rates, led the market on Monday. Tech stocks alone account for more than half of the S&P 500, driven by gains of at least 1.5% for both Microsoft and Apple.
Forecasters expect Tuesday’s inflation update to show consumer prices rose 4.1% last month from a year earlier. That would be down from April’s 4.9% and last June’s peak of 9% but more than double the Fed’s target of 2%.
Two Fed board members have said the Fed should hold off on rate hikes this week while it gathers data on the impact of previous hikes.
On Monday, Switzerland’s UBS said it had completed its acquisition of rival Credit Suisse in a government-organised rescue combining the country’s two biggest banks.
In energy markets, benchmark US crude rose 26 cents to $67.38 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $3.05 to $67.12 on Monday. Brent crude, the price base for international oil trading, rose 43 cents to $72.27 a barrel in London. It fell $2.95 to $71.84 in the previous session.
The dollar fell to 139.52 yen from Monday’s 139.62 yen. The euro rose to $1.0796 from $1.0756.