Global Shares Advance After Inflation Data Drives Rally on Wall Street

Tokyo: Global shares mostly rose Thursday, following a rally on Wall Street driven by an encouraging update on US inflation. France's CAC 40 edged up 1.4 per cent in early trading to 7,576.97, while Germany's DAX was down less than 0.1 per cent at 7,576.97. Britain's FTSE 100 rose 0.7 per cent to 8,355.34. The future for the S&P 500 was up 0.2 per cent, while that for the Dow Jones Industrial Average was nearly unchanged. In Asian trading, Japan's benchmark Nikkei 225 added 0.3 per cent to finish at 38,572.60. Bank of Japan data showed wholesale prices in Japan rose 3.8% in December last year compared to a year earlier, adding to pressures on the central bank to raise interest rates, possibly at a monetary policy meeting next week.

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Global shares rise, US inflation sparks optimism.

In China, the Hang Seng in Hong Kong gained 1.2 per cent to 19,522.89, while the Shanghai Composite index rose nearly 0.3  per cent to 3,236.03. Australia's S&P/ASX 200 surged 1.4  per cent to 8,327.00. South Korea's Kospi gained 1.2  per cent to 2,527.49. Treasury yields eased following an update on how much more US households had to pay in December for eggs, gasoline, housing and other living costs. The report said overall inflation accelerated to 2.9  per cent from 2.7 per cent in November.

US Inflation Eases in December, Sparking Speculation on Future Fed Rate Cuts

The latest US inflation numbers were more encouraging underneath the surface. After ignoring prices for food and energy, which can zigzag sharply from month to month, underlying inflation trends slowed to 3.2 per cent in December. According to FactSet, economists had thought it would remain at 3.3 per cent for a fourth straight month. The Federal Reserve pays more attention to that underlying number than the overall figure, and it's particularly welcome following worries that improvements in inflation have halted and that it will be tough to get all the way down to the Fed's 2 per cent target. Wall Street has been lurching down and up for weeks as traders tear up their forecasts for what the Fed will do with interest rates in 2025. A further easing would boost the US economy and investment prices. However, it could also give inflation more fuel.

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Few traders expect Wednesday's data to convince the Fed to cut its main interest rate at its meeting later this month, as it's done at three straight meetings since September. But economists and analysts say it could open the door for cuts later in the year, maybe even in March, if more data comes in to show that upward inflation pressure is abating. In other dealings, early Thursday, benchmark US crude fell 8 cents to $78.63 a barrel. Brent crude, the international standard, was down 11 cents at $81.92 a barrel. The US dollar declined to 155.72 Japanese yen from 156.47 yen. The euro cost $1.0288, down from $1.0289.