Stocks Rise with Little US Inflation as Trade Tensions Boost Rates

Following Wall Street’s gains after weak inflation data eased fears about the US economy, tech stocks led Asian advances Thursday.

The previous day, US Treasury rates continued to rise while further retreating from recent lows due to intensifying trade disputes between the US and its trading partners. Following President Donald Trump’s warning of a reaction to the European Union’s promised counter-tariffs on US exports on Wednesday, the euro steadied after reversing from a five-month high.

Nonetheless, indications of movement toward peace between Russia and Ukraine continued to strengthen the joint currency. While crude oil remained steady after rising 2% the previous day due to a lower-than-expected increase in US stocks, gold surged to within $13 of its record top.

Advances in semiconductor industry titans like Advantest and Tokyo Electron helped Japan’s Nikkei rise 0.9%. South Korea’s KOSPI increased 0.7%, while Taiwan’s tech-heavy stocks index gained 0.6%. The Mainland While Hong Kong’s Hang Seng reversed from modest early advances to trade down 0.3%, Chinese blue chips managed to gain 0.1%.

On Wednesday, the Nasdaq surged 1.2%, and the US S&P 500 increased 0.5%, with battered megacap tech stocks recovering strongly. On Thursday, futures on both indices showed a 0.1% increase. According to statistics released on Wednesday, US consumer prices increased by 0.2% last month following a 0.5% increase in January. After rising by 0.4% in January, the CPI increased by 0.2% in February after the erratic food and energy components were removed.

Following a recent run of worse economic statistics and the possible inflationary effect of Trump’s tariff campaign, the inflation figures were widely scrutinized. Analysts pointed out that the factors that primarily caused the cooling of price pressures would not contribute to the Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s favored inflation indicator.

Close attention will also be paid to producer prices due later on Thursday. Analysts at TD Securities noted in a client note that “uncertainty remains in the air as the outlook for consumer price inflation remains blurred by trade policy developments.”

“The worst is yet to come, given the impact of the recent tariffs on goods from China, Canada, and Mexico and the likelihood of more announcements.” Trump’s higher tariffs on all US imports of steel and aluminum went into effect on Wednesday, intensifying his push to restructure international commerce in the US’s favor and prompting immediate response from Europe and Canada.

Overnight, US Treasury rates continued to rise from Tuesday’s five-month low for two-year notes due to trade worries. After peaking at 4.005% on Wednesday, the yield was last at 3.924%. Tuesday was the first day since October 4, and it fell as low as 3.829%.

After dropping to $1.0947 on Tuesday for the first time since October 11, the dollar steadied at $1.0895 per euro on Thursday thanks to rising yields. The promise of more defense and infrastructure investment by Germany, along with advancing a truce in the conflict in Ukraine, has caused Europe’s common currency to jump.

Trump’s erratic trade policies have caused fears about a potential U.S. recession, which has put the dollar on the defensive. On Tuesday, the safe-haven yen hit its highest level since October 4 at 146.545 per dollar, but it later declined to 146.205. Additionally, a sharp increase in 30-year Japanese government bond rates subsided.

After reaching their highest level since 2006 at 2.615% on Wednesday, yields fell as low as 2.53% on Thursday. On Wednesday, Bank of Japan Governor Kazuo Ueda emphasized the central bank’s determination to keep tightening monetary policy by stating that recent yield increases were a typical reflection of market expectations of future interest rate hikes.

The record high of $2,956.15, set on February 24, was nearly reached by gold, which increased by around 0.3% to $2,943.49. After the rise on Wednesday, crude oil stabilized. US West Texas Intermediate oil prices were down 0.2% to $67.57 a barrel, while Brent futures fell 0.1% to $70.88. Bitcoin, a cryptocurrency, gained ground after plunging to a four-month low of $76,666.98 on Tuesday, rising 1% to almost $84,000.