Global shares mixed after US inflation data

Global shares were mixed in choppy trading on Thursday after a report showed evidence that inflation in the United States was cooling, even if it remains too high. France's CAC 40 gained 0.6 per cent in early trading to 7,407.78. Germany's DAX edged up 0.1per cent to 15,918.15. Britain's FTSE 100 was little changed at 7,743.42. US shares were set to drift higher with Dow futures up 0.1per cent at 33,637.00. S and P 500 futures rose 0.3 per cent to 4,165.50.

Japan's benchmark Nikkei 225 finished little changed, inching up less than 0.1 per cent at 29,126.72. Australia's S and P/ASX 200 slipped less than 0.1 per cent to 7,251.90. South Korea's Kospi sank 0.2 per cent to 2,491.00. Hong Kong's Hang Seng lost nearly 0.1 per cent to 19,743.79, while the Shanghai Composite fell 0.3 per cent to 3,309.55.

Concerns about the Chinese economy remain a major focus, especially for the Asian region, with the latest cause for worry coming from trade data released Tuesday. “China could be heading into a deflationary funk similar to the one that Japan is starting to emerge from,” said Stephen Innes, Managing Partner at SPI Asset Management.

The Fed has jacked up rates at a furious pace in hopes of driving down inflation. But high rates do that by slowing the entire economy and hitting investment prices broadly. They've already sent stock prices tumbling, caused turmoil in the banking system and dragged on the economy enough that many investors expect a recession to hit this year.

Following the inflation report, traders upped the probability they see of the Fed holding rates steady in June to nearly 94 per cent, according to data from CME Group. Inflation in the US still remains way above the Fed's 2 per cent target and continues to squeeze households across the economy, particularly those with the lowest incomes.

The majority of companies in the S and P 500 have topped profit forecasts so far this reporting season, which is approaching its final stretch. But they're still on pace to report an overall drop in earnings from a year earlier, which would be the second straight quarter that's happened. Besides worries about interest rates and inflation, some corners of the bond market are also swinging on concerns about the US government inching closer to a possible default on its debt. That's never happened before, and economists warn a default could be catastrophic for the economy and financial markets.

In energy trading, benchmark US crude rose 83 cents to $73.39 a barrel.