Beijing, Nov 11: Asian stock markets surged on Friday after US inflation eased by more than expected, spurring hopes the Federal Reserve might scale down plans for more interest rate hikes.
Hong Kong’s market benchmark jumped 5.7 per cent and Seoul rose 3.3 per cent. Shanghai, Tokyo and Sydney advanced. Oil prices edged higher.
Wall Street’s benchmark S and P 500 index soared 5.5 per cent on Thursday for its biggest one-day gain in 2 1/2 years after the government reported consumer prices rose 7.7 per cent over a year ago in October.
That was lower than the 8per cent expected by economists and the fourth month of decline.
The announcement “drove a more dovish’ calibration of interest rate expectations,” said Yeap Jun Rong of IG in a report.
The Fed and central banks in Europe and Asia are raising rates to cool inflation that is at multi-decade highs.
Investors worry that might tip the global economy into recession. They hope lower inflation might prompt the Fed to ease off plans for more increases.
Forecasters warned Thursday it was too early to be certain prices are under control. Fed officials have said rates might have to stay elevated for some time.
Hong Kong’s Hang Seng index soared to 16,994.66 and the Nikkei 225 in Tokyo gained 2.9 per cent to 28,229.68.
The Shanghai Composite Index added 1.4 per cent to 3,078.42 after the ruling Communist Party promised to alter quarantine and other anti-virus tactics to reduce the cost of China’s severe “zero-COVID” strategy that has disrupted the economy.
The Kospi in Seoul rose to 2,481.50 and Sydney’s S and P-ASX 200 was up 2.7 per cent at 7,154.20.
India’s Sensex opened up 1.6 per cent to 61,579.12. New Zealand and Southeast Asian markets advanced.
On Wall Street, the S and P 500 gained to 3,956.37, propelled by big gains for tech heavyweights. Amazon soared 12.2per cent, Apple rose 8.9 per cent and Microsoft climbed 8.2 per cent.
The Dow Jones Industrial Average gained 3.7 per cent, or more than 1,200 points, to 33,715.37.
The Nasdaq composite, dominated by tech stocks, shot up 7.4 per cent to 11,114.15 for its best day since March 2020, when Wall Street was rebounding from a crash at the start of the coronavirus pandemic.
Investors were reassured that US inflation was declining from its June peak of 9.1per cent, though forecasters said the Fed’s campaign to cool price rises was far from over.
Traders expect the Fed to raise its benchmark lending rate in December but by a smaller margin of half a percent following four increases of 0.75 percentage points, triple its usual margin.
That benchmark stands at a range of 3.75 per cent to 4per cent, up from close to zero in March.
The Fed is trying to slow economic activity to reduce pressure for prices to rise.
The latest figures are a sign the Fed is “on the right path,” but it will face “a lot of variables” over the next few quarters, said Edward Moya of Oanda in a report.
He said the benchmark rate could be raised to 5 per cent and “if inflation proves to be sticker, it could be as high as 5.50 per cent.”
Core inflation, which strips out volatile food and energy prices and is more closely watched by the Fed, was 6.3 per cent over a year earlier, down from September’s 6.6per cent and below the consensus forecast of 6.5 per cent.
Core prices rose 0.3 per cent month on month, half of September’s 0.6 per cent gain.
The yield on the 10-year Treasury, which helps set rates for mortgages and other loans, fell to 3.82 per cent from 4.15 per cent.
The two-year yield, which more closely follows expectations for Fed action, fell to 4.32 per cent from 4.62 per cent and was on pace for its sharpest fall since 2008.
In energy markets, benchmark US crude gained 20 cents to USD 86.67 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 64 cents to USD 86.47 on Thursday.
Brent crude, the price basis for international oil trading, advanced 20 cents to USD 93.87 per barrel in London. It rose USD 1.02 to USD 93.67 the previous session.
The dollar declined to 141.52 yen from Thursday’s 141.83 yen. The euro edged up to USD 1.0206 from USD1.0180. (AP)
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