Asian shares saw gains on Friday as investors anticipated a crucial inflation report that could impact the Federal Reserve’s future interest rate decisions.
The Nikkei 225 in Japan surged 0.9% to 39,711.93 early in the trading session. Australia’s S&P/ASX 200 rose 0.6% to 7,803.50, while South Korea’s Kospi edged up nearly 0.3% to 2,790.97. Hong Kong’s Hang Seng added 0.8% to 17,860.79, and the Shanghai Composite jumped 1.0% to 2,976.26.
In economic news, Japan reported an unchanged unemployment rate of 2.6% in May.
On Wall Street, the S&P 500 posted a slight 0.1% gain, maintaining its position near last week’s all-time high. The Nasdaq composite also rose 0.3%, staying just below its peak, while the Dow Jones Industrial Average closed 0.1% higher.
Retailers and communications services led gains, offsetting losses in consumer goods and financial sectors. Amazon.com rose 2.2% and Meta Platforms gained 1.3%. However, Walgreens Boots Alliance dropped 22.2%, the largest decline in the S&P 500, after reporting weaker-than-expected results and reducing its outlook. Levi Strauss fell 15.4% due to disappointing revenue results and earnings forecast.
In positive news, McCormick rose 4.3% after surpassing earnings expectations, while Micron Technology fell 7.1% following a disappointing forecast.
Bond markets saw Treasury yields decline, with the 10-year yield dropping to 4.28% and the two-year yield falling to 4.71%.
Investors await Friday’s release of the personal consumption expenditures index (PCE), the Federal Reserve’s preferred measure of inflation. Economists expect a modest easing to 2.6% in May from 2.7% in April, reflecting a broader trend of inflation easing from its peak in mid-2022.
The Federal Reserve’s decision on interest rates, currently at their highest level in over two decades, could hinge on these inflation figures. Markets anticipate potential rate cuts starting in September.
Elsewhere, U.S. economic growth for the first quarter was revised slightly upward to 1.4%, reflecting ongoing challenges from inflation and high interest rates affecting consumer spending.
Overall, the S&P 500 is set for its fourth consecutive weekly gain, up nearly 4% for June and approximately 15% year-to-date.
In commodities, U.S. crude oil rose to $82.17 a barrel, while Brent crude climbed to $86.78 a barrel. The U.S. dollar strengthened against the yen and the euro, trading at 160.96 yen and $1.0695 respectively.
