Asian stocks gain after US core inflation cools

Jan 17, 2025 - 5:39 am EST @theindpanorama Business & Economics 62

Shares in Asia followed Wall Street higher on Thursday, January 16, as easing US core inflation kept alive the prospect of Federal Reserve rate cuts this year. Benchmarks in Australia, Japan and South Korea all notched gains. The S&P 500 closed Wednesday 1.8% higher, the benchmark’s best day since the November election, which erased its 2025 decline. The tech-heavy Nasdaq 100 climbed 2.3%.
Treasuries were little changed on Thursday after a rally in the previous session pushed 10-year yields 14 basis points lower. An index of the dollar steadied. The yen edged higher after climbing 0.9% against the greenback on Wednesday, its strongest showing since November, while the South Korean won strengthened as the central bank unexpectedly left interest rates unchanged.
The moves centered upon US core consumer price index data for December that rose less than forecast, reinvigorating bets the Fed will cut rates sooner than previously thought. Swap traders are back to fully pricing in a rate cut by July — a quick shift after Friday’s hot jobs data spurred bets officials would only be able to resume policy easing in September or October.
“We’re in a goldilocks scenarios where growth is holding up,” Suresh Tantia, a strategist for UBS Wealth Management, said on Bloomberg Television. “We do expect the earnings of tech companies in Asia to rise substantially this year, especially in the AI space.”
The gains spread across asset classes and supported some of the most speculative corners of financial markets. Bitcoin traded around $100,000 and Goldman Sachs Group Inc.’s basket of money-losing tech companies rose 3.2%. The CBOE VIX index slumped the most this year and a Bloomberg measurement of the “Magnificent Seven” megacaps rallied 3.7%.
A gauge of commodity prices hit the highest level in almost two years against a mixed geopolitical backdrop as sanctions on Russia began to hit crude flows while a cease-fire between Israel and Hamas eased concerns over intensifying conflict.
Oil extended a powerful early-year advance on mounting risks to global supplies, and as commercial crude inventories in the US posted their longest run of declines since 2021. Gold slipped after climbing in the previous two sessions.
The Australian dollar rose after data showed the unemployment rate remained low in December as the economy extended a streak of hiring gains.
Later Thursday, Jan 16, the European Central Bank will release its meeting minutes while US data to be released includes initial jobless claims and retail sales, providing investors with a broader picture of the health of the world’s largest economy.
The Canadian dollar edged higher after a report stated the country has drawn up a list of US goods it would hit with tariffs if President-elect Donald Trump decides to levy tariffs on Canadian goods.
The so-called US core consumer price index — which excludes food and energy costs — increased 0.2% in December. That marked the first stepdown in the rate in six months. From a year ago, it rose 3.2%. That’s still above the Fed’s 2% target.
Source: Bloomberg

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