Asian shares advance after another round of Wall St records

Asian shares were mostly higher on Thursday after US stocks rallied to records on hopes that inflation is heading back in the right direction.

The optimism came from a report showing US consumers had to pay prices for gasoline, car insurance and everything else in April that were 3.4 per cent higher overall than a year earlier, less than March's inflation rate of 3.5 per cent.

The slowdown was a relief after reports for the consumer price index, or CPI, earlier this year had consistently come in worse than expected. Wednesday's report built on expectations that the Federal Reserve might cut its main interest rate this year, the major preoccupation for most investors.

In Asian trading, Tokyo's Nikkei 225 index gained 1.4 per cent to 38,920.26, even after the government reported that the Japanese economy contracted at a 2 per cent annual rate in the January-March quarter.

Hong Kong's Hang Seng index rose 1.5 per cent to 19,355.77. The Shanghai Composite index edged 0.1 per cent lower, to 3,118.40.

In Australia, the S&P/ASX 200 advanced 1.7 per cent to 7,881.30 while South Korea's Kospi climbed 0.8 per cent to 2,753.00.

Taiwan's Taiex was up 0.7 per cent and the Sensex in India gained 0.2 per cent.

On Wednesday, the S&P 500 jumped 1.2 per cent to top its prior high set a month and a half ago, closing at 5,308.15. The Dow Jones Industrial Average added 0.9 per cent to 39,908.00, and the Nasdaq jumped 1.4 per cent to 16,742.39, adding to its own record set a day earlier.

Stocks that tend to benefit the most from lower interest rates helped lead the market. Homebuilders gained on hopes that cuts by the Fed could lead to easier mortgage rates, with Lennar, D R Horton and PulteGroup all rallying more than 5 per cent. Big Tech and other high-growth stocks also rode the wave of expectations for lower rates, and Nvidia's gain of 3.6 per cent was the strongest force pushing the S&P 500 upward.

Real-estate stocks in the S&P 500 climbed 1.7 per cent, while stocks of electricity companies and other utilities rose 1.4 per cent. The dividends they pay look better to investors when bonds are paying less in interest.

On Wall Street, Petco Health + Wellness helped lead the market after soaring 27.9 per cent. It named Glenn Murphy, who is CEO of investment firm FIS Holdings, as its executive chairman.

On the losing end were GameStop and AMC Entertainment, as momentum reversed following their jaw-dropping starts to the week. GameStop fell 18.9 per cent, though it's still up 126.5% for the week so far.

AMC Entertainment sank 20 per cent after it said it will issue nearly 23.3 million shares of its stock to wipe out $163.9 million in debt.

A separate report Wednesday showed no growth in spending at US retailers in April from March. Economists had expected 0.4 per cent growth.

Slowing retail sales could be seen as a positive for markets, because it could reduce the upward pressure on inflation. But weaker US consumer spending would erode one of the main pillars keeping the economy out of a recession. Pressure has grown particularly high on lower-income households.

In the bond market, the yield on the 10-year Treasury eased to 4.34 per cent from 4.45 per cent late Tuesday. The two-year yield, which moves more closely with expectation for Fed action, sank to 4.72 per cent to from 4.82 per cent.

Traders are now forecasting a nearly 95 per cent probability that the Fed cuts its main interest rate at least once this year, according to data from CME Group. That's up from just below 90 per cent a day before.

In other trading early Thursday, US benchmark crude oil picked up 32 cents to $78.92 per barrel in electronic trading on the New York Mercantile Exchange. It gained 61 cents on Wednesday.

Brent crude, the international standard, was up 30 cents at $83.05 per barrel.

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