Shares gain after mild US inflation; yields buoyed by trade tensions

Tech equities led advances in Asia on Thursday, taking their cue from Wall Street's gains after tepid inflation data allayed concerns over the state of the U.S. economy.

U.S. Treasury yields remained elevated after pulling further away from recent lows the day before, on escalating tit-for-tat tariff battles between the United States and trading partners.

The euro was steady after slipping back from a five-month high on Wednesday, when President Donald Trump warned of a response to the European Union's threatened counter-tariffs on U.S. goods. However, the shared currency continued to garner support from signs of progress towards peace between Russia and Ukraine.

Gold climbed to within $13 of its record peak, while crude oil was stable following a 2% climb in the prior session on the back of a smaller-than-expected rise in U.S. stockpiles.

Japan's Nikkei gained 0.9%, buoyed by advances in chip-sector heavyweights such as Advantest and Tokyo Electron.

Taiwan's tech-heavy equities index added 0.6%, and South Korea's climbed 0.7%.

Mainland Chinese blue chips edged up 0.1%, although Hong Kong's Hang Seng retreated from small early gains to be down 0.3%.

The U.S. S&P 500 advanced 0.5% on Wednesday, and the Nasdaq jumped 1.2%, with beaten-down megacap tech shares rebounding sharply. Futures in both indexes , pointed 0.1% higher on Thursday.

On Wednesday, data showed U.S. consumer prices rose 0.2% last month after accelerating 0.5% in January. Excluding the volatile food and energy components, the CPI climbed 0.2% in February after gaining 0.4% in January.

The inflation figures were closely watched following a run of softer economic data recently and the potential inflationary impact of Trump's tariff campaign.

However, analysts noted the components that were mainly responsible for the cooling in price pressures will not feed into the Federal Reserve's preferred inflation measure, the Personal Consumption Expenditures (PCE) price index. Producer prices due later on Thursday will also bear close scrutiny.

"Uncertainty remains in the air as the outlook for consumer price inflation remains blurred by trade policy developments," TD Securities analysts wrote in a client note.

"The impact from the recent implementation of tariffs on Chinese, Canadian and Mexican goods and the expectation of further announcements suggest the worst is yet to come."

Trump's increased tariffs on all U.S. steel and aluminium imports took effect on Wednesday, stepping up a campaign to reorder global trade in favour of the U.S. and drawing swift retaliation from Canada and Europe.

Trade uncertainty saw U.S. Treasury yields extend a climb from Tuesday's five-month low for two-year notes overnight. The yield last stood at 3.924% after rising as high as 4.005% on Wednesday. It sank as low as 3.829% on Tuesday for the first time since October 4.

Rising yields supported the dollar, which was steady at $1.0895 per euro on Thursday, after weakening to $1.0947 on Tuesday for the first time since October 11.

Europe's shared currency has soared on the promise of bigger spending on defence and infrastructure by Germany, along with progress towards a ceasefire in the Ukraine war.

Meanwhile, the dollar has been on the defensive with Trump's unpredictable trade policies sowing concerns about a possible recession in the United States.

The safe-haven yen pulled back to 146.205, after reaching its strongest since October 4 at 146.545 per dollar on Tuesday.

A steep climb in 30-year Japanese government bond yields also faded. Yields sank as low as 2.53% on Thursday, easing from their highest since 2006 at 2.615% on Wednesday.

Bank of Japan Governor Kazuo Ueda said on Wednesday that recent rises in yields were a natural reflection of market expectations of future interest rate hikes, underscoring the central bank's resolve to continue tightening monetary policy.

Gold rose about 0.3% to as high as $2,943.49, closing in on the record high from February 24 at $2,956.15.

Crude oil steadied following Wednesday's rally. Brent futures eased 0.1% to $70.88 a barrel, while U.S. West Texas Intermediate crude futures edged down 0.2% to $67.57 a barrel.

Cryptocurrency Bitcoin added 1% to around $84,000, making up additional ground following its sharp drop to a four-month trough at $76,666.98 on Tuesday.