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Global stocks rallied after US markets hit a record high following a steady inflation figure that boosted bets that the Federal Reserve will cut interest rates next month.
The reading eased concerns that US President Donald Trump’s tariffs would stoke inflation, paving the way for an expected quarter-point cut at next month’s Fed meeting.
Japan’s benchmark Topix gained 1.1 per cent to an all-time high, South Korea’s Kospi climbed 0.8 per cent and Taiwan’s Taiex edged up 0.3 per cent.
Chinese stocks also rallied, with Hong Kong’s Hang Seng index rising 1.9 per cent and the CSI 300 index adding 0.9 per cent.
On Tuesday, Wall Street’s S&P 500 index gained 1.1 per cent and the tech-heavy Nasdaq Composite climbed 1.4 per cent to close at new peaks after the Bureau of Labor Statistics reported that US inflation in July held steady at 2.7 per cent, lower than forecasts of 2.8 per cent.
“A lot of people have been very cautious since April,” said Wee Khoon Chong, a senior strategist at BNY, referring to the announcement of Trump’s tariff policy. “But the wave of money that’s coming into the market just dwarfs all negative sentiment, especially for the AI boom.”
The rally in Asia was in part due to expectations of continued strong US demand for semiconductor exports from the region, said Jason Lui, head of Asia-Pacific equity and derivative strategy at BNP Paribas.
Chipmaker SK Hynix’s shares rose 2.7 per cent while Sony Group rose 4.3 per cent. Japan’s Maruwa, which produces ceramics for circuit boards and semiconductors, gained 2.9 per cent and the world’s largest chipmaker Taiwan Semiconductor Manufacturing Company added 0.4 per cent.
“Because the US has been so resilient it may have alleviated some concerns” for chip demand, Lui said.
Chinese equities were also supported by a new consumer loan interest programme and subsidies for loans to consumption sector businesses.
Asian markets stand to benefit from a weaker dollar and lower US rates. The dollar slipped 0.4 per cent against a basket of its peers on Tuesday and fell a further 0.1 per cent on Wednesday.
Futures markets are pricing in a 96 per cent chance of a quarter-point cut at next month’s Fed meeting, compared with about 85 per cent before the inflation data came out.
“Whenever the US dollar weakens fund flows tend to go into emerging markets,” Lui said.
