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Asian stocks near three-week top, dollar eases after U.S. inflation
Stock Markets1 hour ago (May 11, 2018 01:01AM ET)

� Reuters. FILE PHOTO: A videographer films an electronic board showing the Japan's
Nikkei average and related indexes at the Tokyo Stock Exchange in Tokyo� Reuters.
FILE PHOTO: A videographer films an electronic board showing the Japan's Nikkei
average and related indexes at the Tokyo Stock Exchange in Tokyo
By Swati Pandey

SYDNEY (Reuters) - Asian shares rallied on Friday as risk appetite got a boost from
soft U.S. inflation, helping alleviate worries of faster rate hikes by the Federal
Reserve, while investors also cheered U.S.-North Korean steps to further ease
tensions on the Korean Peninsula.

Thursday's slower-than-expected April consumer price rises followed payrolls data


last week which pointed to sluggish wage growth.

The two data sets meant "inflation may be rising but not so rapidly that the Fed
would have to take aggressive actions to keep the economy from overheating," said
James McGlew, analyst at Perth-based stock broker Argonaut.

The recent shakeout in markets, partly stoked by Sino-U.S. trade tensions, has also
eased off, while money managers expect the relatively low global rates that fueled
the 'goldilocks' boom in stock markets last year will remain in place for some
time.

"While inflation is continuing to trend up it's only happening slowly. So


Goldilocks continues," Shane Oliver, chief investment manager at AMP, said in a
note.

Indeed, a key measure of expected market swings, the Cboe Volatility Index, or VIX,
has fallen very close to levels last seen in early January when stock markets were
buoyant.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.9 percent to near
three-week highs with broad-based gains across all sectors.

Japan's Nikkei climbed 1 percent while South Korea's KOSPI added 0.7 percent. Hong
Kong's Hang Seng index jumped 1.4 percent. Chinese shares gave up early gains to be
marginally lower.

On Wall Street, the Dow rose 0.8 percent, the Nasdaq Composite gained 0.89 percent
and the S&P 500 rose 0.9 percent, surging past key resistance of 2,717 points.

GEOPOLITICS

Investors also appeared to welcome continued moves between the United States and
North Korea to reduce tensions in the region.

U.S. President Donald Trump will meet North Korean leader Kim Jong un in Singapore
next month amid high hopes of "doing something very meaningful" to curtail
Pyongyang's nuclear ambitions.

Concerns still remain around U.S.-China trade skirmishes and rising tensions in the
Middle East, although analysts say the June 12 U.S.-Korea summit will ensure the
trade war rhetoric takes a back-seat for now.

"Trump still needs President Xi (Jinping) and China's support in dealing with North
Korea and this will be his priority in the short term," economists at JPMorgan
(NYSE:JPM) wrote in a note to clients.

"Once the meeting is finished, trade may return to the fore."

The United States and China locked horns over import tariffs earlier this year
after Trump first announced hefty duties on Chinese goods, provoking a tit-for-tat
response from Beijing.

"It is notable that in line with this view, the U.S. has extended hearings over
China tariffs, drawing out the process," they added.

Currency markets were largely muted during Asian trading.

The dollar index was up 0.1 percent after falling the most since late March in
overnight trade.

Investors trimmed their expectations for four Fed rate hikes after inflation data
showed U.S. price pressures remained weak. The Fed has already raised rates once
this year and is widely expected to go two more times in 2018.

The British pound inched above a four-month low of $1.3457 touched on Thursday
after the BoE held key borrowing costs. It was last at $1.3525.

The recent slowing in price growth in major economies has boosted expectations that
most central banks except the Fed will continue their massive bond-buying programs
to keep policy stimulatory.

The euro was barely changed at $1.1911. The Japanese yen was a tad weaker at 109.45
per dollar.

Malaysian markets were closed Friday but its newly appointed Prime Minister
Mahathir Mohamad emerged with key election pledges including repealing an unpopular
goods and services tax and restoring a petrol subsidy.

Ratings agency Moody's said some campaign promises would be "credit negative" for
Malaysia.

Such concerns pushed up the cost of insuring against a Malaysia default, with the
country's 5-year credit default swap price at its highest since early June 2017 at
95.090 basis points.

In commodities markets, spot gold slipped 0.1 percent to $1,319.33 an ounce.

Oil prices eased but stayed near multi-year peaks amid supply concerns after Trump
withdrew from an Iranian nuclear deal and reinstated sanctions.

U.S. crude futures were last down 10 cents at $71.26 a barrel. Brent crude futures
fell 18 cents to $77.29 a barrel, after hitting $78 earlier in the day, their
highest since November 2014.

(This story has been refiled to fix transposed words in fourth paragraph)

Asian stocks near three-week top, dollar eases after U.S. inflation

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IndicesCommoditiesForexCrypto
1D
1W
1M
6M
1Y
5Y
Max
2,717.75
16:00
11/05
08:00
2,700.00
2,690.00
2,710.00
2,720.00
S&P 500 Futures 2,717.50 -1.25 -0.05%
Nasdaq Futures 6,953.50 -11.50 -0.17%
Dow 30 24,739.53 +196.99 +0.80%
SmallCap 2000 1,603.84 +8.26 +0.52%
S&P 500 VIX 13.23 0.00 0.00%
DAX 13,022.87 +79.81 +0.62%
US Dollar Index 92.66 +0.09 +0.10%
Bitcoin Futures 8,830.0 -290.0 -3.18%

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