Asian markets rise on eased US inflation hopes

Asian markets experienced a surge on Friday, driven by a lower-than-expected US inflation reading, which has bolstered hopes for another interest rate cut next month. The earnings report from chip firm Micron Technology also helped to alleviate concerns about a potential tech bubble. The US inflation rate slowed to its lowest level since July, falling below forecasts and providing a positive outlook for rate cuts.

The Bank of Japan (BoJ) increased its borrowing costs to a three-decade high, following data that showed prices continuing to rise above the preferred rate. The yen initially fell against the dollar but later recovered. The move by the BoJ has led to a rise in yields on 10-year Japanese government bonds, which have been increasing in recent weeks due to concerns about Prime Minister Sanae Takaichi’s budget discipline.

The positive trend in Asian markets was mirrored in Wall Street, where the main indexes rose after coming under pressure in recent weeks. The tech sector, which has led the equity surge to record highs this year, had been subject to speculation about a potential bubble. However, Micron Technology’s blowout earnings and upbeat outlook have helped to ease these concerns.

The Asian markets’ gains were widespread, with Tokyo adding 1% and Hong Kong, Shanghai, Sydney, Seoul, Singapore, Taipei, Mumbai, Bangkok, and Wellington all experiencing increases. In contrast, London and Paris fell at the open, while Frankfurt remained flat. The yen’s weakness is expected to continue, with observers predicting it will strengthen as the US Federal Reserve cuts rates while the BoJ raises them.

Key market figures at 0815 GMT included the Tokyo Nikkei 225 rising 1.0% to 49,507.21, the Hong Kong Hang Seng Index increasing 0.8% to 25,690.53, and the Shanghai Composite gaining 0.4% to 3,890.45. The dollar-yen exchange rate rose to 156.68 yen from 155.63 yen on Thursday, while the euro-dollar exchange rate fell to $1.1720 from $1.1721.

The current market trends and economic developments will likely continue to influence investor decisions and market movements in the coming weeks. As the global economy navigates the complexities of inflation, interest rates, and technological advancements, market watchers will be closely monitoring the situation to anticipate potential shifts and opportunities.