Stock market today: World shares are higher on optimism that price pressures may be easing

By YURI KAGEYAMA
AP Business Writer

TOKYO (AP) — World shares rose Monday as investors took heart from reports that show inflation is abating, which might enable the Federal Reserve to back away from interest rate hikes.

U.S. futures were mixed and oil prices edged higher.

Germany’s DAX added 0.3% to 16,187.06. In Paris, the CAC 40 edged up 0.1% to 7,406.82 and Britain’s FTSE 100 rose 0.3% to 7,553.25.

The future for the Dow Jones Industrial Average was down 0.1% while that for the S&P 500 was up 0.1%. On Friday, S&P 500 climbed 1.2% to 4,450.38, its highest level since April 2022. The Dow Jones Industrial Average rose 0.8% and the Nasdaq composite jumped 1.4%.

U.S. trading is closed for half a day Monday and all of Tuesday for the Independence Day holiday.

Investors are hoping price increases will ease enough for the Federal Reserve to soon halt its hikes to interest rates. That would mean less pressure for the U.S. economy and for global financial markets.

A report on Friday showed a measure of inflation that the Fed prefers to use eased in May. It also said growth in spending by consumers slowed by more than expected. If fewer dollars are chasing after purchases, that could remove more pressure on inflation.

Inflation in Europe slid again in June, with the annual rate at 5.5%, down from 6.1% in May in the 20 countries that use the euro currency, the European Union statistics agency Eurostat reported.

That’s an improvement but not enough to offer much relief to shoppers grumbling over price tags or to stop more interest rate hikes that will raise the cost of borrowing across the economy.

In Asia, too, central banks have begun holding steady or easing rates to counter slowing economic activity. Vietnam and China have been cutting rates, while other countries are seeing manufacturing activity cool as demand for exports weakens.

In Asian trading, Japan’s benchmark Nikkei 225 rose 1.7% to 33,753.33 in afternoon trading. Australia’s S&P/ASX 200 added 0.6% to 7,246.10. South Korea’s Kospi jumped 1.5% to 2,602.47. Hong Kong’s Hang Seng surged 2.1% to 19,306.59, while the Shanghai Composite gained 1.3% to 3,243.98.

The quarterly “tankan report” of business sentiment compiled by the Bank of Japan showed an improvement for the fifth consecutive quarter, from June last year, with the main indicator number rising by 3 points to plus 23.

The Federal Reserve has already raised rates a mammoth 5 percentage points from virtually zero early last year. Traders on Wall Street have pared back bets that the Fed may hike interest rates twice again this year, with the majority wagering the federal funds rate will be only 0.25 percentage points higher at the end of 2023, if it all, according to data from CME Group.

Yields in the bond market turned lower Friday after the release of the economic data. The 10-year Treasury yield fell to 3.82% from nearly 3.87% just before the report’s release. It helps set rates for mortgages and other important loans.

The S&P 500 closed out its sixth winning week in its last seven in June and its best month since October. The index’s gain of nearly 16% through the first six months of the year is better than it’s done in 16 of the last 23 full years.

In energy trading, benchmark U.S. crude picked up 57 cents to $71.21 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, advanced 59 cents to $76.00 a barrel.

In currency trading, the U.S. dollar rose to 144.73 Japanese yen from 144.30 yen. The euro cost $1.0890, down from $1.0924.

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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama