Asian markets generally rose on Thursday and oil prices continued to decline as forecast-beating US inflation was overshadowed by optimism for a potential end to the Ukraine conflict following reports that Donald Trump and Russia's Vladimir Putin had discussed peace negotiations.
The US president stated he anticipated a meeting with his Russian counterpart in Saudi Arabia "in the not too distant future" with the aim of finding a path to ending the three-year conflict, which has heightened geopolitical concerns and energy costs.
Trump stated that the two had engaged in a "lengthy and highly productive" conversation and expressed his expectation that they would conduct reciprocal visits to each other's nations.
The Kremlin stated that the conversation lasted almost one-and-a-half hours, and the leaders concurred that "the time has come to work together".
Ukrainian President Volodymyr Zelensky stated that he had a "meaningful conversation" with Trump, and the leaders discussed methods to bring an end to the conflict.
News of the apparent easing of tensions between the nuclear-armed powers provided a boost to risk appetite, with the euro and pound both rising against the dollar.
London and Frankfurt experienced their third consecutive day of record-high values.
Crude oil prices declined once again on Thursday, having dropped over two percent the previous day.
"If this push for peace gains momentum, expect an even larger decline in war-related assets and a new surge in investments with higher risk," said Stephen Innes at SPI Asset Management.
In morning trade, Hong Kong, Tokyo, Shanghai, Sydney, Seoul, Taipei, and Manila were all up, while Singapore, Wellington, and Jakarta declined.
Despite setbacks on Wall Street, the gains were achieved, as investors were taken aback by data released on Wednesday showing a three percent increase in consumer prices last month, exceeding expectations and surpassing the rate of December.
Core inflation, excluding food and energy, exceeded forecasts.
The data dealt a blow to expectations that the Fed would continue to lower interest rates this year, having reduced them three times in 2024, with investors now betting on just one cut, according to Bloomberg.
The numbers came a day after Federal Reserve Chairman Jerome Powell stated that policymakers are not eager to ease monetary policy further, a sentiment shared by other officials.
"Our assessment is straightforward: the Federal Reserve has no justification to reduce interest rates further. Inflation appears to be persistently above the desired level," analysts at BoA Global Research stated in a report.
The bar for hikes is still set high, but they should be considered as part of the discussion following today's data.
Shortly after the data was made public, Trump criticized his predecessor Joe Biden for driving up prices.
He also called for rates to be reduced, stating they would "go hand in hand" with his plans to impose tariffs on key US trading partners – despite many economists arguing that both measures would increase inflation.
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Tokyo - Nikkei 225: UP 1.3 percent at 39,474.80
Hong Kong - Hang Seng Index: Increased by 1.1 percent to 22,104.68
Shanghai Composite: rose 0.1 percent to 3,349.80.
Euro/dollar: UP at $1.0395 from $1.0387 on Wednesday
The pound/dollar exchange rate has increased to $1.2451 from $1.2446.
Dollar/yen: UP at 154.50 yen from 154.39 yen
Euro/pound: Increased to 83.48 pence, up from 83.40 pence.
West Texas Intermediate: DOWN 0.9 percent at $70.73 per barrel
Brent North Sea Crude: DOWN 0.9 percent at $74.52 per barrel
New York - Dow: Down 0.5 percent at 44,368.56 (close)
London - FTSE 100: Increased by 0.3 percent to 8,807.44 (at the close)