Asian markets were divided, but gold reached a new high on Monday after data showed a modest increase in US inflation, which Federal Reserve Chairman Jerome Powell said was “in line with expectations”.
Traders were also encouraged by a significant increase in Chinese industrial activity, which raised expectations that the world’s second largest economy could be on its way back after bottoming out.
The Dow and S&P 500 also set milestones Thursday, with the latter posting its best first quarter since 2019.
Long-awaited data on the personal consumption expenditures (PCE) index, the Fed’s preferred measure of inflation, showed a little year-on-year increase in March compared to February, while the core reading softened slightly.
Powell stated that the report “is pretty much in line with our expectations” and that policymakers were on pace to meet their long-term inflation objective of 2%.
He stated that, while previous inflation data was higher than the Fed would have like, February readings were “definitely more along the lines of what we want to see”.
The report appeared to have little impact on traders’ expectations for a June interest rate decrease, but Powell cautioned that rates were unlikely to fall to levels observed during the 2008 global financial crisis.
Friday’s news came after a surprising upward revision to fourth-quarter US economic growth on Thursday, which some analysts suggested could hinder the Fed’s ambitions to reduce borrowing costs.
Seoul, Singapore, and Manila all saw increases in Asian commerce, but Taipei and Jakarta lost ground.
Hong Kong, Sydney, Wellington, London, Paris, and Frankfurt were all closed for Easter.
According to Bloomberg News, gold reached a record high of $2,265.73, extending the year’s surge, which has been fueled by US central bank suggestions of credit easing.
It is also bolstered by its appeal as a safe haven in times of instability, as geopolitical tensions rise.
Shanghai rose over 1% as traders cheered news that China’s manufacturing expanded for the first time in half a year, providing a boost to officials as they try to revive the faltering economy.
The 50.8 reading in March was the first expansion since September and much exceeded expectations.
“The industrial sector appears to be resilient, aided by strong exports,” said Zhang Zhiwei of Pinpoint Asset Management.
“If fiscal spending rises and exports remain strong, the economic momentum may improve.”
However, Tokyo fell more than 1% after the Bank of Japan’s carefully regarded Tankan survey revealed that confidence among Japan’s major manufacturers fell in the first quarter after rising for three consecutive quarters.
The yen rose somewhat after stabilising at the conclusion of the week after reaching a 34-year low versus the dollar on Wednesday.
Key figures around 0715 GMT
Tokyo – Nikkei 225: DOWN 1.4 percent at 39,803.09 (close)
Shanghai – Composite: UP 1.2 percent at 3,077.38 (close)
Hong Kong – Hang Seng Index: Closed for holiday
London – FTSE 100: Closed for a holiday
Dollar/yen: DOWN at 151.34 yen from 151.39 yen on Thursday
Euro/dollar: DOWN at $1.0786 from $1.0789
Pound/dollar: UP at $1.2624 from $1.2619
Euro/pound: DOWN at 85.43 pence from 85.47 pence
West Texas Intermediate: UP 0.3 percent at $83.43 per barrel
Brent North Sea Crude: UP 0.2 percent at $87.21 per barrel
New York – Dow: UP 0.1 percent at 39,807.37 points (close)