Asian markets rally with Wall St after US inflation eases further

Pedestrians walk in front of an electronic quotation board displaying stock prices of Nikkei 225 on the Tokyo Stock Exchange in Tokyo on September 12, 2024. (Photo by Kazuhiro NOGI / AFP)

Hong Kong, China — A surge in tech firms Thursday helped Asian markets track a Wall Street rally after data showed US inflation at a more than three-year low, reinforcing expectations the Federal Reserve will cut interest rates next week.

The much-anticipated consumer price index allowed investors to breathe a sigh of relief after a tough couple of weeks that have been filled with worries about the world’s top economy, as a weak run of jobs figures stoked recession fears.

While a report on wholesale prices is due later in the day, the main focus is now on next week’s Fed policy decision and its post-meeting statement on the outlook for rates.

READ: US stocks rebound as market eyes Fed rate cut after inflation data

Bets are now surging on a 25-basis-point reduction, with talk of a 50-point shift muted by figures showing that core inflation had seen an unexpected uptick.

US traders welcomed the data and pushed all three main indexes higher, with the Nasdaq up more than two percent and the S&P 500 more than one percent.

The rally was fuelled by a big jump in the tech sector, with chip titan Nvidia rocketing more than eight percent, advanced Micro Devices almost five percent higher and Microsoft piling on 2.2 percent.

And the positive mood flowed through to Asia, where Tokyo led gainers and jumped more than three percent after seven days of losses, while Hong Kong, Shanghai, Sydney, Seoul, Singapore, Taipei, Manila and Jakarta also enjoyed strong buying sentiment.

“A first rate cut in September should now trigger a new cycle of interest rate cuts,” said Philipp Bartschi at Bank J. Safra Sarasin.

The advances were fanned by a rally among regional tech giants, particularly semiconductor manufacturers, who have wobbled in recent weeks on worries about the economy and high valuations following a scorching run-up in 2024.

In Tokyo, Advantest jumped seven percent and Hitachi more than four percent, TSMC was up 4.7 percent in Taipei and Seoul-traded SK hynix added six percent.

The spike in Japan’s Nikkei was helped by a drop in the yen sparked by expectations US rates will only likely be cut by the smaller amount.

The yen had hit 140.71 per dollar at one point Wednesday — its strongest in nine months — after a top Bank of Japan official said it would press on with its monetary tightening if the economy and inflation act as expected.

The unit was also helped by improving odds on a Kamala Harris US presidency after she came out on top in her debate with Donald Trump, whose policies many observers see as being likely to strengthen the dollar.

Oil rose again, extending the previous day’s gains of more than two percent that analysts said was helped by offshore platform production suspensions in the Gulf of Mexico caused by Hurricane Francine.

Key figures around 0230 GMT

Tokyo – Nikkei 225: UP 2.8 percent at 36,605.62 (break)

Hong Kong – Hang Seng Index: UP 1.0 percent at 17,279.75

Shanghai – Composite: UP 0.2 percent at 2,728.17

Dollar/yen: UP at 142.54 yen from 142.38 yen on Tuesday

Euro/dollar: DOWN at $1.1010 from $1.1018

Pound/dollar: DOWN at $1.3035 from $1.3046

Euro/pound: UP at 84.46 pence from 84.43 pence

West Texas Intermediate: UP 0.1 percent at $67.36 per barrel

Brent North Sea Crude: UP 0.2 percent at $70.74 per barrel

New York – Dow: UP 0.3 percent at 40,861.71 (close)

London – FTSE 100: DOWN 0.2 percent at 8,193.94 (close)