Asian Stocks Set to Rise After U.S. Inflation
Shares in Asia are set to follow Wall Street higher after fresh data showed core inflation eased in the U.S., keeping alive the prospect of a Federal Reserve interest rate cut this year
Shares in Australia and equity futures for Japan and Hong Kong all advanced. The S&P 500 closed 1.8% higher on Wednesday, the benchmark’s best day since the November election, erasing its 2025 decline. The tech-heavy Nasdaq 100 gained 2.3%.
Treasuries followed the rally, pushing the 10-year yield 14 basis points lower during Wednesday’s session, easing concerns that the benchmark interest rate will soon hit 5%. The dollar index fell as U.S. yields fell. The yen was steady on Thursday after rising 0.9% against the greenback in the previous session, its strongest showing since November. Australian and New Zealand bond yields fell in early trading on Thursday.
The moves centered on U.S. core consumer price data for December that rose less than expected, reviving bets that the Fed will cut interest rates sooner than previously thought. Swap traders are back fully pricing in a July rate cut — a swift turnaround after Friday’s hot jobs data fueled bets that officials will only be able to resume policy easing in September or October.
“The extreme sentiment led to the strong post-CPI move,” said Steve Sosnick at Interactive Brokers. “The magnitude of the rally reflects the nervous sentiment that has spread to the market.”
The gains spread across asset classes and supported some of the most speculative corners of the financial market. Bitcoin re-approached $100,000 and Goldman Sachs’ basket of technology losers rose 3.2%. The CBOE Vix index fell the most this year and Bloomberg’s measure of the “Magnificent Seven” megacaps rose 3.7%.
Commodity price gauges hit their highest levels in nearly two years against a mixed geopolitical backdrop as sanctions on Russia began to affect crude oil flows while a cease-fire between Israel and Hamas eased concerns about escalating conflict
U.S. West Texas Intermediate crude futures were steady after surging nearly 4% on Wednesday to surpass $80 a barrel for the first time since August on tighter U.S. inventories and curbs on Russia. Gold was flat after rising to around $2,694 per barrel in the previous session.
In Asia, data due include producer prices in Japan, jobs in Australia and an interest rate decision in South Korea. The Bank of Korea is expected to cut borrowing costs by 25 basis points to 2.75%. Later on Thursday, the European Central Bank will release its meeting minutes while U.S. data due include initial jobless claims and retail sales, which give investors a broader picture of the health of the world’s largest economy.
The Canadian dollar was little changed after a report said the country has drawn up a list of U.S. goods that could be subject to tariffs if President-elect Donald Trump decides to impose tariffs on Canadian goods.
Source: Bloomberg
