Asia markets track Wall Street gains ahead of key U.S. inflation data – NBC New York

This is CNBC’s live blog covering Asia-Pacific markets.

Asia-Pacific markets were mostly higher Wednesday, tracking Wall Street gains overnight that saw the Nasdaq Composite index hit a fresh record closing high despite strong inflation data.

The producer price index reading for April came in at 0.5%, above the 0.3% that economists polled by Dow Jones had expected. The initial market reaction was negative but stocks subsequently rose as March wholesale prices were revised down to show a 0.1% decline.

Markets in South Korea and Hong Kong were shut on Wednesday for a public holiday.

Investors also assessed Australia’s annual budget released late on Tuesday.

The People’s Bank of China kept its one-year medium term lending facility rate unchanged at 2.5%. Mainland China’s CSI 300 index fell 0.45%.

In Australia, the S&P/ASX 200 index opened 0.44% higher.

Japan’s Nikkei 225 gained 0.75%, while the broader Topix added 0.53%.

Overnight on Wall Street, stocks ended Tuesday higher as investors awaited a key inflation report.

The Nasdaq Composite gained 0.75% to close at a record high of 16,511.18.

The Dow Jones Industrial Average added 126.60 points, or 0.32%, while the S&P 500 added 0.48%.

— CNBC’s Lisa Kailai Han and Brian Evans contributed to this report.

Australia announced its annual budget, aims to ease cost of living

Australia’s government announced its annual budget late Tuesday, with measures aimed at easing cost of living, building more homes, and strengthening its healthcare system, among other things.

“This budget strikes the right balance between keeping pressure off inflation, delivering cost of living relief, supporting sustainable economic growth and strengthening public finances,” Jim Chalmers, Treasurer of Australia said in a joint statement with Australia’s prime minister, Anthony Albanese.

The government forecast a second surplus in 2023–24, “which would be the first time a government has delivered back‑to‑back surpluses in nearly two decades,” Chalmers said.

— Shreyashi Sanyal

CNBC Pro: These are Goldman Sachs’ favorite stocks with 50% or more upside

Stocks have been on a tear.

The S&P 500 is soaring to record highs this year and the Dow Jones Industrial Average just had its best week of the year — and its eighth-straight winning session last Friday.

But Goldman Sachs has still given some of its favorite stocks more than 50% potential upside, and one more than 100%.

CNBC Pro subscribers can read more about them here.

— Weizhen Tan

CNBC Pro: Is meme trading back? These 4 stocks could benefit from a retail investor boom

Whether retail investors profit from their bets on GameStop and AMC Entertainment or not, one group of companies is set to cash in from a spike in trading.

These four companies have previously acknowledged a boost to earnings from heightened retail investor trading.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Inflation is persisting at levels too high to justify rate cuts this year, according to strategist

The Federal Reserve is unlikely to cut rates this year, according to Verdence Capital Advisors’ Chief Investment Officer Megan Horneman.

While Horneman also views a rate hike as unlikely, she believes the U.S. central bank will be forced to keep rates on hold for the remainder of the year as inflation persists.

“It’s a problem that they’ve exacerbated by taking such a dovish tone and — as early as last year — letting the markets price in so many rate cuts,” she said. “They really need to get these markets to be more realistic on where interest rates are going to go.”

— Lisa Kailai Han

Negative economic surprises will eventually drag stocks down, Citi says

The market has reacted positively to negative economic surprises in recent times, but Citi believes this “bad news is good news” narrative will soon change.

“Seasonally, surprises tend to trough around now and, with Fed hikes off the table for the near future, good economic news will likely be welcomed by risky assets,” wrote analyst Nathaniel Rupert.

He added, “However, with cracks appearing in the labor market, more below-consensus data would eventually weigh on equities (even though the first cut may be viewed positively), as would a tightening in financial conditions in our view.”

— Lisa Kailai Han

OpenAI event ‘raises the bar’ on AI chatbots, Bank of America says

OpenAI’s Monday event highlighting its new desktop app and some refreshes “raises the bar, again, for consumer chatbots,” according to Bank of America analyst Vivek Arya.

He wrote in a Tuesday note that the event “ups the ante for AI assistant,” adding that semiconductor stocks should see multiyear growth tailwinds from the computing and networking capabilities needed to appease the expanding artificial intelligence use cases.

Analyst Wamsi Mohan also highlighted Apple as a potential beneficiary from OpenAI and multimodal assistants and the potential productivity gains.

“Much of the demo used a ‘hardwired’ iPhone to lower latency of real time interaction,” he wrote. “Maintain Buy on benefits from GenAI at edge with gross margin upside and momentum in Services.”

Even so, Rosenblatt’s Barton Crockett views the event as a potential competitive pressure point for Alphabet ahead of its Google I/O event. The developments also seem to turn up the head on Apple, which has struggled for years to create similar capabilities for its Siri component, he added.

“We suspect that Apple is nowhere near, internally, to what OpenAI just demoed,” he wrote. “If Google can’t show an ability to match OpenAI at I/O, then Apple will be under meaningful pressure we believe to partner with OpenAI to modernize Siri for the current state of AI.”

— Samantha Subin