Asian shares mostly gain amid cautious relief over U.S.-China agreement

TOKYO (AP) — Asian shares were mostly higher Wednesday as a cautious sense of relief spread through regional markets after the U.S. and China agreed to a 90-day pause in their trade war.

Japan’s benchmark Nikkei 225 lost 0.8% to 37,874.59. Australia’s S&P/ASX 200 shed 0.1% to 8,260.40.

South Korea’s Kospi surged 1.1% to 2,635.86. Hong Kong’s Hang Seng jumped 1.1% to 23,367.57, while the Shanghai Composite gained 0.1% to 3,377.75.

The relief over the trade truce between the U.S. and China is tepid among global businesses and investors given uncertainty over how long it might last and where tariffs might go in the months ahead.

“In the absence of a lasting deal, uncertainty over where tariff rates will settle and the impact of those already implemented will remain key factors in our macroeconomic forecasts,” said Brian Coulton, chief economist at Fitch Ratings.

A report overnight that showed U.S. inflation unexpectedly slowed last month helped drive buying that pushed the S&P 500 up 0.7%, to 5,886.55. The Dow Jones Industrial Average fell 0.6% to 42,140.43, and the Nasdaq composite climbed 1.6% to 19,010.08.

The S&P 500 fell nearly 20% below its record last month, but has since recovered on hopes that President Donald Trump will ease his stiff tariffs on trading partners worldwide before they create a recession and send inflation spiking higher.

The S&P 500, which sits at the center of many 401(k) accounts, is back within 4.2% of its all-time high set in February and positive again for the year so far.

Tuesday’s report said that even with all the uncertainty around trade, and even with many businesses rushing to import products from other countries before tariffs raise their prices, inflation slowed to 2.3% last month from 2.4% in March.

Such data pulls the economy further from a worst-case scenario called “stagflation,” where the economy stagnates but inflation remains high. The Federal Reserve has no good way to fix that toxic combination. It could try to lower rates to help the economy, for example, but that would likely worsen inflation in the short term.

Even with Tuesday’s encouraging report, economists and analysts say inflation may still run higher in coming months because of Trump’s tariffs. That will likely leave the Fed waiting for more data to guide their decision on whether and when to cut interest rates in order to help the economy.

It’s similar to the wait that investors in general are enduring. With the Fed set to make no moves on interest rates for the time being, markets will likely trade “with negotiation and reconciliation headlines,” according to Alexandra Wilson-Elizondo, global co-head and co-chief investment officer of multi-asset solutions within Goldman Sachs Asset Management.

On Wall Street, stocks in the artificial-intelligence industry were strong. Nvidia rose 5.6% and was the biggest single force pushing upward on the S&P 500. It’s partnering with Saudi Arabia’s sovereign wealth fund-owned AI startup Humain to ship 18,000 chips to the Middle Eastern nation to help power a new data center project.

In the bond market, Treasury yields ticked higher with hopes for the U.S. economy. The yield on the 10-year Treasury rose to 4.48% from 4.45% late Monday.

The two-year Treasury yield, which moves more closely with expectations for Fed action, ticked up to 4.01% from 3.98%.

In energy trading, benchmark U.S. crude fell 44 cents to $63.23 a barrel. Brent crude, the international standard, declined 46 cents to $66.17 a barrel.

In currency trading, the U.S. dollar edged down to 147.16 Japanese yen from 147.21 yen. The euro cost $1.1192, up from $1.1188.

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AP Business Writer Stan Choe in New York contributed.