Asian markets extended their global rally on Thursday after U.S. inflation came in below forecasts, providing much-needed relief to investors and rekindling hopes for interest rate cuts later this year.
In markets including Hong Kong, Sydney, Seoul, Taipei, Manila, and Jakarta, stocks rose by more than 1%, with similar gains observed in Shanghai, Singapore, and Wellington. Tokyo posted modest improvements, although its gains were constrained by a stronger yen against the dollar following the inflation data, along with investors weighing the possibility of a rate hike by the Bank of Japan at its meeting next week.
Across the Pacific, U.S. stocks surged on Wednesday, with all three major indexes recording their largest daily percentage increases in more than two months. This rally followed lower-than-expected core inflation figures for December and robust earnings from major U.S. banks. The Dow Jones Industrial Average advanced 1.65% to 43,221.55, the S&P 500 climbed 1.83% to 5,949.91, and the Nasdaq Composite increased 2.45% to 19,511.23. These marks were the strongest one-day percentage gains for all three indexes since the U.S. election results were announced on November 6. Additionally, the Russell 2000 index of small-cap stocks rose by 1.99%.
U.S. Treasury yields also softened, falling to 4.651% from a 14-month high of 4.809% earlier in the week. Bank shares benefited from a slew of impressive earnings reports, with JPMorgan posting a record annual profit. Consequently, JPMorgan’s stock increased by 1.97%, Goldman Sachs’ surged by 6.02%, and Citigroup’s jumped by 6.49%, while the S&P 500’s bank index rose by 3.37%.
