Asian shares advance as yields, inflation fears moderate

Stocks climbed in Asia on Thursday after a key measure of inflation in the U.S. came in lower than expected, easing worries that price pressures could push interest rates higher.

Shares rose in Tokyo, Shanghai and Hong Kong but were flat in Sydney.

On Wall Street, energy and financial stocks rose while Big Tech shares declined. The S&P 500 added 0.6% and the Dow Jones Industrial Average hit a record high, though tech stocks pulled the Nasdaq slightly lower.

The Labor Department reported that U.S. consumer prices, a key measure of inflation at the consumer level, rose 0.4% in February, the biggest gain in six months, led by a jump in gasoline prices. But core inflation, excluding food and energy, posted a much smaller 0.1% gain, easing fears that the inflation might surge as the economy recovers from the pandemic.

The timing could not have been better, Stephen Innes of Axi said in a commentary.

“As Biden’s . . . $1.9 trillion fiscal stimulus plan was passed by the House, CPI data revealing softer sequential core pressures were there to greet and subdue fears of runaway inflation," Innes said. “Upshot being, U.S. inflation data appears to have bought some space for, and lent credence to, prolonged and unwavering stimulus."

Treasury yields fell broadly following the report, including the benchmark 10-year Treasury note, which influences interest rates on mortgages and other consumer loans. The yield on the 10-year Treasury note was steady at 1.52% on Thursday after rising as high as 1.60% late last week.

Bond yields have risen in the past month. The fall in bond prices, which are inversely related to yields, attracted investors reluctant to pay high prices for stocks, especially tech stocks that looked most expensive.

Tokyo's Nikkei 225 index gained 0.6% to...