Asian Shares Rally On Weak US Inflation Data, China Stimulus Hopes

Asian stocks followed Wall Street higher on Thursday after weaker-than-expected U.S. inflation data bolstered hopes of the Federal Reserve nearing the end of its tightening campaign.

Sluggish Chinese trade data also spurred calls for more government stimulus.

The dollar continued to weaken and yields on U.S. government bonds tumbled while oil and gold prices were slightly higher in Asian trade.

The Japanese yen traded close to a two-month high against the dollar after Japan’s top financial diplomat Masato Kanda said that there is a view that speculative yen short positions are unwinding rapidly.

Chinese shares rallied as investors shrugged off worse-than-expected trade data and cheered signals from authorities that a years-long crackdown on tech on the tech industry is over amid a weakening economy.

The benchmark Shanghai Composite index climbed 1.26 percent to 3,236.48 and Hong Kong’ Hang Seng index jumped 2.60 percent to 19,350.62 after Chinese Premier Li Qiang met with senior executives from the country’s leading technology firms on Wednesday.

Japanese shares posted strong gains, with heavyweight chip-related stocks leading the surge amid indications of inflation normalizing in the U.S.

The Nikkei average jumped 1.49 percent to 32,419.33, marking its biggest one-day jump since July 3. The broader Topix index settled 0.97 percent higher at 2,242.99. Screen Holdings, Tokyo Electron and Advantest climbed 2-4 percent.

Uniqlo brand owner Fast Retailing advanced 1.7 percent after raising its full-year revenue and net profit views.

Sony Group soared 4.5 percent after reports that the game and audio equipment maker is hiking R&D spending at its gaming unit.

Seoul stocks rose for a third consecutive session after the Bank of Korea held its policy rate for a fourth meeting, as widely expected, citing slowing inflation. The Kospi average gained 0.64 percent to close at 2,591.23.

Hanwha Ocean Co., formerly Daewoo Shipbuilding & Marine Engineering Co., soared 5.3 percent and state-run Korea Electric Power Corp rallied 3.5 percent.

Australian and New Zealand shares jumped after government bond yields fell.
Australia’s benchmark S&P/ASX 200 rallied 1.56 percent to 7,246.90, marking its biggest rise in six months.

The broader All Ordinaries index gained 1.55 percent to finish at 7,455.40, with miners and property developers pacing the gainers.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 index rose 0.88 percent to 12,013.43.

U.S. stocks rose overnight, Treasury yields fell to a two-week low and the dollar plummeted to its lowest since April 2022, as investors cheered lowest inflation reading in over two years.

Data showed U.S. consumer price inflation rose 3 percent in June, marking their smallest year-on-year increase since March 2021, after 4 percent growth in May. Core inflation also moderated from 5.3 percent from 4.8 percent, easing pressure on the Fed to keep raising interest rates.

The tech-heavy Nasdaq Composite and the S&P 500 gained 1.2 percent and 0.7 percent, respectively to hit their best closing levels in over a year while the Dow edged up 0.3 percent.

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