BEIJING, Aug. 11 (BNA): Asian stocks extended their global rally Thursday after weaker-than-expected US inflation data encouraged bets to raise interest rates less sharply from the Federal Reserve, while the dollar struggled to stabilize after its biggest drop. in five. months.
US consumer prices remained unchanged in July compared to June, when they rose monthly by 1.3%. The July result was less than expected due to the sharp drop in the cost of gasoline, causing markets to shift in hopes that inflation was at its peak, Reuters reported.
MSCI’s broadest index of Asia Pacific shares outside Japan (.MIAPJ0000PUS) rose 1.4% to a six-week high, buoyed by a 1.8% jump in Hong Kong (.HSI), 1.2% advance in South Korean shares (.KS11) and 1.5% Gains in Leading China (.CSI300).
Risk sentiment in Europe is set to continue when markets open, with futures contracts across the region on the Euro Stoxx 50 rising 0.4%. S&P 500 futures rose 0.2% and Nasdaq futures added 0.3%.
“Rising real yields, due to the Fed’s commitment to fighting inflation, has been a major problem for valuations in 2022, so any pessimism is seen as positive by the stock market, especially for higher value companies,” said multilateralist Oliver Blackburn. Asset Portfolio Manager at Janus Henderson Investors.
“However, the more pessimistic outlook has undermined a major support for the US dollar.”
Overnight on Wall Street, the S&P 500 (.SPX) rose more than 2% after the inflation report, while the Nasdaq Composite (.IXIC) added 2.9%. The Nasdaq has now gained more than 20% from its June low.
Slowing inflation in the US may have opened the door for the Federal Reserve to moderate the size of upcoming interest rate hikes. Traders are now pricing in a 50 basis point rate hike next month, compared to the 75 basis point increase expected before the inflation report.
FKN