Source: AFP
Most Asian markets rose on Thursday, following a rebound in Europe and New York and after upbeat remarks from a senior Federal Reserve official that inflation was moving in the right direction.
Data on Tuesday showing that the US consumer price index slowed less than expected in January dented hopes for an early rate cut and sent Asian indices mostly lower.
But investors returned to markets on expectations that borrowing costs will fall this year, while traders also welcomed strong earnings announcements that calmed any worries about corporate results.
“Over time we think it will become clear that January was more of a one-off against a new CPI trend,” said 22V Research strategists led by Dennis DeBusschere.
Traders will be closely watching the release of the producer price index, which is expected at the end of the week.
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Stephen Innes, of SPI Asset Management, added that the recovery in the US stock market “offers some respite after the bolt from the blue produced by the inflation data” on Tuesday.
“Despite inflation, which remains very high against arbitrarily set targets, the US macroeconomic picture continues to evolve consistently with a soft landing,” he added.
The Fed’s vice chairman for supervision, Michael Barr, said the central bank should be “cautious” about the timing of rate cuts, but added that it was “confident” that inflation was returning to its 2% target.
“We need to see continued good data before we can begin the process of lowering the federal funds rate,” Barr said.
In Tokyo, official data released on Thursday showed Germany overtook Japan last year as the world’s third-largest economy, largely due to a sharp fall in the yen.
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Japan’s economy grew 1.9% last year, although it shrank for a second straight quarter in October-December, pushing it into a technical recession.
Japan’s nominal gross domestic product in 2023 in dollar terms was $4.2 trillion, according to government data, compared with $4.5 trillion for Germany, according to data released last month.
However, Tokyo’s Nikkei rose, while gains were also made in Hong Kong, Sydney, Singapore and Manila.
Shares in Taipei’s Taiex hit a record intraday high, fueled by gains in semiconductor maker Taiwan Semiconductor Manufacturing Company (TSMC) after strong sales boosted optimism for the sector and demand for chips used in artificial intelligence .
The Taiex jumped as much as 3.5 percent at the open, surpassing a January 2022 peak as traders returned from the Lunar New Year holiday.
“The shift to larger tongue models will boost demand for higher quality chips, which benefits TSMC’s flagship foundry business,” analysts including Charlie Chan said in a note.
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Jakarta stocks also rose after Defense Minister Prabowo Subianto declared himself the winner in Indonesia’s general election, a result that observers said showed policy continuity.
Wellington and Bangkok were submerged, while Shanghai was closed for the Lunar New Year holiday.
Keys around 02:30 GMT
Tokyo – Nikkei 225: UP 1.06 percent at 38,103.27
Hong Kong – Hang Seng Index: DOWN 0.35 percent at 15,824.21
Shanghai – Composite: Closed for holidays
EUR/USD: UP at $1.0733 from $1.0730 on Wednesday
Dollar/yen: DOWN to 150.48 yen from 150.60 yen
GBP/USD: DOWN to $1.2563 from $1.2564
Euro/pound: UP at 85.39 pence from 85.37 pence
West Texas Intermediate: DOWN 0.4% to $76.31 a barrel
North Sea Brent crude: Down 0.4% at $81.28 a barrel
New York – Dow: UP 0.4 percent at 38,424.27 (close)
London – FTSE 100: UP 0.8 per cent to 7,568.40 (close)
— Bloomberg News contributed to this story —
Source: AFP