The Japan Times - Stocks mostly higher on cool US inflation

Asian equities, catching up with big advances Monday on Wall Street as investors basked in the glow of the China-US tariff suspension, posted strong gains, although Hong Kong dropped nearly two percent on profit-taking.

The dollar dipped against its main rival currencies following gains on Monday.

Oil prices firmed further on hopes that the global economy would avoid a tariffs-fuelled recession.

Data released on Tuesday showed US consumer inflation cooled slightly in April even as President Donald Trump's sweeping tariffs came into force.

The data covered the introduction of the new levies against most countries -- including steep duties on China -- which spooked financial markets and raised fears of a spike in prices.

Despite these fears, the US consumer price index (CPI) eased to 2.3 percent in April from a year ago, a tick below the 2.4 percent figure recorded in March, the Labor Department said in a statement.

This was the smallest 12-month increase since February 2021, and was slightly lower than the median estimate from surveys of economists conducted by Dow Jones Newswires and The Wall Street Journal.

"This data suggests that the US economy was in good shape in April, that tariffs are not showing up in the inflation data yet, and that demand for services remains strong," said Kathleen Brooks, research director at XTB.

"The market reaction to this news has been positive for stocks," she added.

It follows global stocks jumping on Monday after the United States agreed to temporarily reduce its 145-percent duties on China to 30 percent, while Beijing cut its retaliatory measures to 10 percent from 125 percent.

Briefing.com analyst Patrick O'Hare said investor sentiment has also been comforted by progress made by US lawmakers on their budget plans, which include tax cuts.

"The stock market finds itself in a hopeful state that is allowing for a better-than-feared economic and earnings outlook," he said.

But Toro market analyst Lale Akoner said the US inflation data showed housing costs remained stubbornly high and other core elements proved sticky, which doesn't give the US Federal Reserve a clear indication it can cut rates.

"For now, this mixed bag validates the Fed’s cautious stance," she said.

"There’s no urgency to cut, but no clear case for tightening either."

Investors are now pricing in a first-quarter percentage point rate cut in September.

- Auto sector -

On the corporate front, focus was on the auto sector after major news out of Japan.

Nissan posted a annual net loss of $4.5 billion, confirmed plans to slash 15 percent of its global workforce and warned about the possible impact of US tariffs.

The carmaker, whose mooted merger with Honda collapsed this year, is heavily indebted and engaged in an expensive business restructuring plan.

For its part, Honda on Tuesday forecast a 70-percent drop in net profit for the 2025-26 financial year.

"The impact of tariff policies in various countries on our business has been very significant, and frequent revisions are being made, making it difficult to formulate an outlook," said Honda chief executive Toshihiro Mibe.

- Key figures at around 1330 GMT -

New York - Dow: DOWN 0.3 percent at 42,264.93 points

New York - S&P 500: UP less than 0.1 percent at 5,847.61

New York - Nasdaq Composite: UP 0.2 percent at 18,752.44

London - FTSE 100: FLAT at 8,607.64

Paris - CAC 40: UP 0.2 percent at 7,865.74

Frankfurt - DAX: UP 0.1 percent at 23,591.96

Tokyo - Nikkei 225: UP 1.4 percent at 38,183.26 (close)

Hong Kong - Hang Seng Index: DOWN 1.9 percent at 23,108.27 (close)

Shanghai - Composite: UP 0.2 percent at 3,374.87 (close)

Euro/dollar: UP at $1.1145 from $1.1089 on Monday

Pound/dollar: UP at $1.3240 from $1.3173

Dollar/yen: DOWN at 147.78 yen from 148.38 yen

Euro/pound: DOWN at 84.17 pence from 84.18 pence

Brent North Sea Crude: UP 0.9 percent at $65.57 per barrel

West Texas Intermediate: UP 1.1 percent at $62.63 per barrel

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M.Ito--JT