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Asia stock markets rally as Wall Street hits all-time highs

Stocks in Asia

Hong Kong’s Hang Seng and Australia’s stock benchmark each rallied around 1.6%, and Japan’s Nikkei gained more than 1%

Asian stock markets rallied on Thursday, buoyed by Wall Street’s surge to all-time highs overnight after a milder U.S. inflation report raised expectations the Federal Reserve will deliver two interest rate cuts this year.

The dollar stayed on the back foot, sagging to fresh multi-week lows against rivals including the euro and sterling.

U.S. Treasury yields extended their decline in Tokyo trading, dropping to six-week lows. That helped the beaten-down yen to continue its recovery, even as data showed the Japanese economy contracted more than expected in the first quarter.

Gold moved toward record levels and crude oil added to gains after bouncing back strongly overnight from a two-month low.

U.S. data on Wednesday showed the CPI increased by 0.3% in April, below an expected 0.4% gain, raising hopes the Fed can reduce rates by 50 bps this year, with the first quarter-point cut fully priced for September.

The data provided succour to markets after higher-than-expected U.S. consumer prices in the first quarter had led to a sharp paring of rate cut bets and even stoked some concerns of an additional hike.

The expression of relief ripples through risky assets, with markets coming alive the moment we saw U.S. core CPI, Chris Weston, head of research at Pepperstone, wrote in a report.

He added: All in all, after three months of troubling price pressures, this is a report that will sit well with Fed Chair Jay Powell and co.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.5%. Hong Kong’s Hang Seng and Australia’s stock benchmark each rallied around 1.6%.

Japan’s Nikkei gained more than 1%.

U.S. CPI inflation provided relief that the Fed’s last mile towards its 2% inflation target may become less complicated, DBS Group strategists wrote in a client note.

They said: Market participants are sufficiently satisfied to keep the soft-landing narrative going, buoying risk sentiment in the process.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Precise Investors. The information provided on Precise Investors is intended for informational purposes only. Precise Investors is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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