Asian shares bounce back, shrugging off inflation concerns

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ASIAN shares bounced back Friday, May 13, 2022, from losses earlier in the week, shrugging off data showing US wholesale prices soared 11 percent in April from a year earlier.

The regional rally followed a mixed and muted close on Wall Street. Oil prices and US futures also were higher.

Investors are puzzling over what’s next with inflation and the US central bank’s response to it. Trading has been volatile, with indexes prone to sharp swings as investors try to shield their portfolios from the impact of the highest inflation in decades.

Federal Reserve Chairman Jerome Powell, fresh off winning Senate confirmation for a second four-year term, for the first time Thursday acknowledged that high inflation and weakness in other economies could thwart his efforts to avoid a recession.

Powell had earlier sought to portray the Fed’s efforts to tighten interest rates as consistent with a so-called “soft landing” for the economy.

Hong Kong’s Hang Seng index gained 2.5 percent to 19,862.99 and the Nikkei 225 in Tokyo jumped 2.6 percent to 26,427.65. South Korea’s Kospi added 2.1 percent to 2,604.24 and in Sydney, the S&P/ASX 200 advanced 1.9 percent to 7,075.10.

The Shanghai Composite index gained 0.9 percent to 3,081.89 and India’s Sensex climbed 1.2 percent.

Central bank moves to fight back against price increases by raising interest rates are pulling some currencies lower while the dollar rises. The Japanese yen has weakened sharply in the past several months, while the Chinese yuan, whose value against other currencies is regulated, has also weakened.

The euro, likewise, has weakened amid the fighting in Ukraine and uncertainty over supplies of Russian gas and oil . The euro was trading at $1.0399 early Friday having fallen below the $1.0500 level it had hovered near for most of the week.

“European risk sentiment is getting mangled by news of Russia cutting gas supply in retaliation for sanctions,” Stephen Innes of SPI Asset Management said in a commentary.

“EUR (the euro) has crashed through $1.05 and has even broken down through $1.04 on the back of the news. Indeed, this truly highlights the uncertainty as we advance with the threat and disruption of the Russian energy supply,” he said. (A)

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