Stock market today: Asian shares jump on Wall Street's return to its highest level in over a year

Asian shares have opened higher, boosted by Wall Street’s return to its highest level in more than a year after a report showed U.S. consumer inflation cooled a bit more than expected last month

Asian shares rose Thursday, boosted by Wall Street's return to its highest level in more than a year after a report showed U.S. consumer inflation cooled a bit more than expected last month.

Japan's benchmark Nikkei 225 jumped 1.5% in afternoon trading to 32,425.69.

Hong Kong’s Hang Seng surged 2.6% to 19,357.96, while the Shanghai Composite gained 1.3% to 3,236.86, even as China reported a slump in trade in June.

Chinese exports tumbled 12.4% in June from a year earlier as demand weakened after central banks raised interest rates to curb inflation even as Chinese leaders struggled to keep a post-COVID recovery from faltering. The customs data released Thursday showed imports slid 6.8%, while the trade surplus rose was $70.6 billion, rising from $65.8 billion in May.

“China will likely recover at some point, but we will unlikely see the Chinese growth put a severe pressure on commodity markets. That’s one good news for inflation watchers,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said in a commentary.

Australia's S&P/ASX 200 added 1.7% to 7,253.50. South Korea's Kospi rose 0.8% to 2,595.51.

Wednesday on Wall Street, the S&P 500 rose 0.7% to 4,472.16 to reach its strongest closing level since April 2022. The Dow Jones Industrial Average rose 0.3% to 34,347.43, and the Nasdaq composite gained 1.2% to 13,918.96.

Most stocks rose, from flashy Big Tech behemoths to staid utility companies, though the gains faded a bit as the day progressed.

The U.S. government’s latest update on inflation showed that consumers paid prices for gasoline, food and other items that were 3% higher overall in June than a year earlier. That’s down from 4% inflation in May and a bit more than 9% last summer. Perhaps more importantly, it was a touch lower than economists expected.

High inflation has been at the center of Wall Street’s problems because it’s driven the Federal Reserve to jack up interest rates at a blistering pace. Higher rates undercut inflation by slowing the entire economy and hurting investment prices, and they've already caused damage to the banking, manufacturing and other industries.

Traders remain nearly convinced the Fed will raise the federal funds rate at its meeting in two weeks to a range of 5.25% to 5.50%, which would be its highest level since 2001. But expectations are also climbing for that to be the final increase after rates started last year at virtually zero.

Treasury yields tumbled in the bond market after the cooler inflation data pushed traders to trim bets for Fed action later this year.

The 10-year Treasury yield fell to 3.86% from 3.98% late Tuesday. It helps set rates for mortgages and other important loans.

The two-year Treasury yield dropped to 4.73% from 4.89%. It tends to follow expectations for the Fed more closely.

A resilient job market has helped to keep the economy out of a recession, though it's also under pressure from higher rates. The latest “Beige Book” from the Federal Reserve on Wednesday said that overall economic activity has increased slightly since late May. It also said several Fed districts have noticed some slowing in inflation.

In energy trading, benchmark U.S. crude rose 19 cents to $75.94 a barrel. Brent crude, the international standard, gained 25 cents to $80.36 a barrel.

In currency trading, the U.S. dollar edged up to 138.71 Japanese yen from 138.41 yen. The euro cost $1.1138, up from $1.1128.

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AP Business Writer Zen Soo contributed.