Inflation in the US jumps 5%, leading to higher share prices in Asia

Asian share prices increase by 5% after the US records 5% inflation in May

In Asia, share prices recorded high figures on Friday, following the S&P 500 index recorded another high, with the consumer prices in the US soaring in May. Share prices dropped in Shanghai. Besides, the prices dropped in Tokyo. Again, the markets in Sydney, Hong Kong, and Seoul witnessed a rise. It was on Thursday that Wall Street witnessed gains.

However, there was a drop in bond yields after the report, which was already anticipated, revealed that the consumer prices soared by 5% in May. This happens to be the biggest increment on a year-on-year basis after 2008. Moreover, the soar was higher than most economists had anticipated.

The performance of the market yielded a positive response from the investors. As per the data, the labor market continued to improve significantly. However, there’s a sign of worry amidst this kind of performance. In case the signs of inflation keep lingering, it is likely that central banks would be promoted to withdraw the stimulus from the respective economy so that the price pressures get eased up. However, presently investors are continuing to bank on the stance of the Federal Reserves that the present bout of inflation happens to be a transitory element. For long, financial markets have selectively used facts, an expert commented in a report. Even when the inflation measures in the US increased once again a little above the forecasted value, the actual increments were higher than the ones that were recorded last April.

Considering every factor, this was the path required to infuse strength to the market. The mood was not very jovial in Asia, where tensions between the US and China significantly influenced the sentiment. The Nikkei 225 index of Tokyo did not change much, remaining at 28,959.54. However, there was a rise of 0.4% at Hang Seng in Hong Kong, finishing at 28,851.00. Besides, Kospi in Seoul witnessed a 0.7% increment to finish at 3,246.20. There was a 0.3% dip in the Shanghai Composite index, at Shanghai Composite index. In India, the Sensex gained 0.5%.

The S&P 500, on Thursday, gained 0.5% to end at 4,239.18, which was more than its all-time high recorded on 7th May. At 34,466.24, the Dow Jones Industrial Average finished 0.1% higher. Again, there was a 0.8% rise in the Nasdaq Composite, which ended at 14,020.33. Apart from these, the market stocks of the smaller companies did not have the border market. A dip of 0,7% was recorded in the Russell 2000 index, ending at 2,311.41. The increment in consumer prices in May is attributed to the transactions involving used cars. This was triggered by rental companies purchasing more vehicles to scale up their fleets as more people resorted to traveling.

Apart from this, there was an initial increment in bond yields after news of inflation spread, but by late afternoon the figures dipped. On the 10-year Treasury, the yield slipped from 1.45% to 1.43% late on Thursday. Throughout the week, stock prices have been volatile, as the investors had been waiting to know the update on inflation.

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