Asia Markets: Asian stock markets mostly climb as cooler U.S. inflation reading inspires ‘risk-on’ buying

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The Asia-Pacific continued the week’s global stock rebound, following fresh gains in the U.S. as worries ease about higher interest rates.

A number of indexes are set to cap their best week in months, coming as oil prices jumped to fresh 3 ½-year highs in recent days.

In Hong Kong, the Hang Seng Index HSI, +1.37%  finished the morning up 1.4% and is on pace to log a straight week of advances. The index had been underperforming, with six weekly declines in the past seven.

AIA 1299, +2.53%  , Asia’s biggest publicly traded insurer, rose nearly 3% to hit fresh record highs while auto maker Geely 0175, +4.41%  climbed 4%.

“Short-covering activities and a softening U.S. dollar are the drivers behind today’s rally,” said Ample Capital’s director Alex Wong.

The WSJ Dollar Index saw its biggest decline in seven weeks Thursday after weaker-than-expected increase for U.S. consumer prices in April. The dollar DXY, +0.04%  , along with bond yields fell on cooled concerns of a more-aggressive pace of rate increases from the Federal Reserve.

A report showing a weaker-than-expected increase for U.S. consumer prices in April helped push the dollar DXY, +0.04%   and bond yields lower after recent gains, cooling concerns of a more-aggressive pace of rate increases from the Federal Reserve.

“The inflation reading is a positive setup” for Asian equities, said James Cheo, a senior investment strategist at Bank of Singapore, providing investors “some reassurance” that inflation remains well checked.

But Ample Capital’s Mr. Wong said it’s too early to make the call that the market has turned a corner, as many investors are remaining on the sidelines while the U.S.-China trade spat continues.

Strong gains were seen Friday in a number of markets, with Japan’s Nikkei Stock Average NIK, +1.03%  and Taiwan’s Taiex Y9999, +0.92% rising nearly 1%.

Gains of at least 1.5% were seen in Indonesia and the Philippines — helped by the weaker dollar — after both had seen declines of more than 10% the past several months as broader concerns grew about emerging markets.

Singapore’s Straits Times Index STI, +0.77% behind somewhat, rising 0.4% following Thursday’s underperformance in the wake of a surprise opposition win in elections in neighboring Malaysia. Markets there remain closed until Monday; a U.S.-listed exchange-traded fund of Malaysian stocks rebounded 1.8% following a 6% plunge Wednesday.

S&P 500 futures ESM8, +0.11%  were recently up 0.1%.

Bucking the uptrend was China, where declines of some 1% in smaller-cap stocks sent benchmarks across the board lower at the midday break. China’s Shanghai Composite SHCOMP, +0.05%  fell 0.7%.

Australia’s leading stock average  XJO, +0.03%  rose 0.2%.

Meanwhile, oil futures CLM8, -0.13%   were down slightly by midday in Asia, after hitting their highest levels in more than three years Thursday.