Global shares mostly higher ahead of key US inflation data

TOKYO — (AP) — Global shares were mostly higher Thursday ahead of a closely watched report on U.S. inflation that is viewed as a good indicator of whether Wall Street’s recent rising optimism is warranted or overdone.

European benchmarks were headed upward in early trading. In Asia, shares started out trading mixed but later settled mostly higher. Oil prices fell.

France’s CAC 40 rose nearly 0.6% in early trading to 6,962.54, while Germany’s DAX edged up 0.2% to 14,979.18. Britain’s FTSE 100 rose 0.5% to 7,764.61. The futures for the Dow Jones Industrial Average and S&P 500 edged 0.1% lower.

In Asian trading, Japan’s benchmark Nikkei 225 wobbled finished little changed at 26,449.82, up less than 0.1%. Australia’s S&P/ASX 200 jumped 1.2% to 7,280.40. South Korea’s Kospi gained 0.2% to 2,365.10. Hong Kong’s Hang Seng rose 0.4% to 21,514.10, recouping earlier losses, while the Shanghai Composite rose less than 0.1% to 3,163.45.

“All eyes are on the arrival of U.S. inflation data this week,” Clifford Bennett, chief economist at ACY Securities, said in a report.

Japan’s Finance Ministry reported the country’s current account returned to the black in November for the first time in two months, reflecting a slimming of the trade deficit as the yen regained value against the U.S. dollar and other currencies.

On Wall Street on Wednesday, the S&P 500 climbed 1.3% and the Dow industrials rose 0.8%. The Nasdaq composite gained 1.8%.

Stocks began 2023 with gains driven by hopes that cooling inflation and a slowing economy may lead the Federal Reserve to ease off its steep interest rate hikes. Such increases can help stamp out high inflation, but they also slow the economy and raise the risk of a recession while hurting prices for stocks and other investments.

Economists expect CPI Thursday’s report to show inflation is continuing to cool from its summertime peak, down to 6.5% last month from 7.1% in November and from more than 9% in June. The hope on Wall Street is that such a trend toward normal could convince the Fed to soon halt its blistering set of rate increases, often triple the usual amount.

Some investors are even betting the Fed will cut interest rates in the second half of this year to help prop up an economy that’s beginning to show pockets of weakness because of past rate hikes. Rate cuts typically act like steroids for markets, boosting prices for stocks and other investments.

But if Thursday’s data and other reports don’t show inflation is improving as much as expected, it could mean the Fed would have to get tougher on interest rates.

The Fed has already said repeatedly it plans to raise its key overnight interest rate further, past its current perch sitting in a range of 4.25% to 4.50%. That rate began last year at its record low of virtually zero.

Later this week, companies will also begin reporting how much profit they made during the last three months of 2022. Bank of America, Delta Air Lines, JPMorgan Chase and UnitedHealth are among those reporting results on Friday.

In energy trading, benchmark U.S. crude gained 19 cents to $77.60 a barrel. It jumped $2.29 to 77.41 on Wednesday. Brent crude, the international pricing standard, advanced 29 cents to $82.26 a barrel.

In currency trading, the U.S. dollar slipped to 131.68 Japanese yen from 132.44 yen. The euro cost $1.0750, inching down from $1.0757.


Yuri Kageyama is on Twitter