The Japan Times - Stocks mixed after cool US inflation and as rally tapers

Temporary US-China tariff reductions announced on Monday still firmed up oil prices, however. They extended gains as investors' fears of blocked trade between the world's two largest economies were quelled.

But "the US dollar rally seems to be momentarily running out of steam," said Axel Rudolph, senior technical analyst for trading platform IG.

In midday New York trading, the S&P 500 and Nasdaq were trading in positive territory, while the Dow was showing small losses.

In Europe, London closed barely changed, while Paris and Frankfurt both ticked up 0.3 percent.

Asian equities had finished with strong gains, in their catch-up session digesting Wall Street's jump on Monday, although Hong Kong dropped nearly two percent on profit-taking.

"Both the Nasdaq 100 and the S&P 500 are trading back in positive territory for the year as US inflation unexpectedly slows and China lowers tariffs on US goods," said Rudolph.

Data released on Tuesday showed US consumer inflation cooled slightly in April, despite financial markets that month being spooked by President Donald Trump's sweeping tariffs.

The US consumer price index eased to 2.3 percent in April from a year ago, a shade below the 2.4 percent figure recorded in March, the Labor Department said in a statement.

"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.

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 eToro market analyst Lale Akoner said stubbornly high housing and other sticky core elements in US inflation shored up a wait-and-see stance by the US Federal Reserve while it weighs a possible rate cut.

"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.

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 1530 GMT -

New York - Dow: DOWN 0.3 percent at 42,277.05 points

New York - S&P 500: UP 0.9 percent at 5,896.01

New York - Nasdaq Composite: UP 1.6 percent at 19,007.40

London - FTSE 100: FLAT at 8,602.92 (close)

Paris - CAC 40: UP 0.3 percent at 7,873.83 (close)

Frankfurt - DAX: UP 0.3 percent at 23,638.56 (close)

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 $1.1177 from $1.1089 on Monday

Pound/dollar: UP at $1.3279 from $1.3173

Dollar/yen: DOWN at 147.83 yen from 148.38 yen

Euro/pound: DOWN at 84.15 pence from 84.18 pence

Brent North Sea Crude: UP 1.9 percent at $66.17 per barrel

West Texas Intermediate: UP 2.2 percent at $63.28 per barrel

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Y.Ishikawa--JT