Asian Shares Follow Wall Street Higher On US Inflation Relief

Asian stocks followed Wall Street higher on Monday after the Federal Reserve’s preferred inflation gauge came in below expectations, fueling hopes for more rate cuts by the U.S. Federal Reserve in 2025.

Underlying sentiment was also underpinned by expectations of more Chinese stimulus and the passing of a crucial funding bill in the U.S. that helped avert a year-end government shutdown.

The dollar index held steady and bond yields stabilized after core PCE inflation figures released last week signaled softer price pressures. Gold and oil prices were modestly higher in Asian trade.

China’s Shanghai Composite index ended down half a percent at 3,351.26 after a choppy session.

Hong Kong’s Hang Seng index jumped 0.82 percent to 19,883.13 amid expectations that China will ramp up economic support and shift to a moderately loose monetary stance next year.

Japanese markets rose sharply, led by automakers and technology stocks. The Nikkei average rose 1.19 percent to 39,161.34 while the broader Topix index settled 0.92 percent higher at 2,726.74.

Toyota Motor rallied 2.4 percent, Nissan added 1.5 percent, Honda Motor climbed 3.8 percent, Tokyo Electron rose 1.3 percent and Advantest surged 4.5 percent.

Seoul stocks rallied as foreign and institutional investors both turned net buyers after the release of softer-than-expected U.S. PCE inflation data. The Kospi average climbed 1.57 percent to 2,442.01.

Tech heavyweights Samsung Electronics and SK Hynix rose about 1 percent and 0.7 percent, respectively. Hanmi Semiconductor soared 8.7 percent after the resolution of uncertainties regarding the U.S. government’s semiconductor subsidies.

Australian stocks bounced back sharply after steep declines in the previous session. The benchmark S&P/ASX 200 closed up 1.67 percent at 8,201.60, with banks and miners leading the surge after an unexpected dip in U.S. inflation print.

The broader All Ordinaries index ended up 1.64 percent at 8,452.70 as the RBA meeting minutes loomed.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 index rose 0.65 percent to 12,988.03. in the run-up to Christmas.

U.S. stocks logged strong gains on Friday after the release of softer-than-expected inflation figures.

Data showed PCE Inflation, the Fed’s preferred reading on consumer price inflation, has increased 0.1 percent month-on-month in November versus expectations of a 0.2 percent increase.

The annual rate rose to 2.4 percent from 2.3 percent in the previous month but was still below the 2.5 percent anticipated by markets.

The core PCE eased to 0.1 percent from 0.3 percent in October and the yearly rate held steady at 2.8 percent.

Chicago Fed President Austan Goolsbee told CNBC’s Steve Liesman he’s hopeful the data suggests “the couple of months of firming were more of a bump than a change in path.”

The Dow surged 1.2 percent after having finished marginally higher the previous day to snap a ten-day losing streak.

The tech-heavy Nasdaq Composite rallied 1 percent and the S&P 500 added 1.1 percent.

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