TOKYO — Asian stocks experienced a positive trend on Thursday, buoyed by the latest U.S. inflation data that aligned closely with economists’ expectations, along with Japan’s robust economic growth figures.
Japan’s Nikkei 225 index surged by 0.8%, closing at 36,726.64. The S&P/ASX 200 in Australia climbed 0.2% to reach 7,865.50. In contrast, Hong Kong’s Hang Seng index slipped 0.3% to 17,054.92, while the Shanghai Composite Index skyrocketed by 1.0% to 2,877.73. Trading in South Korea was halted in observance of Liberation Day, a national holiday.
Recent data from Japan’s Cabinet Office revealed that the country’s economy, the fourth largest in the world, grew at an annualized rate of 3.1% during the April-June quarter, signaling a strong recovery from the previous quarter’s contraction.
This annualized figure indicates the potential growth or contraction if the quarterly rate were maintained for an entire year. Domestic demand surged by an impressive 3.5% from the previous quarter, driven by healthy household consumption, robust private sector investments, and significant government spending. Additionally, exports experienced a remarkable increase of 5.9%.
A significant source of uncertainty has shifted from currency fluctuations and interest rates to the political landscape, as Japan’s ruling Liberal Democratic Party prepares to select a new leader following Prime Minister Fumio Kishida’s announcement that he would not seek reelection. The next leader is expected to emerge from the party, suggesting a continuation of Japan’s pro-U.S., pro-business policies, though the potential successor remains unclear. Analysts speculate that a younger candidate might garner more voter support.
Meanwhile, economic indicators from China presented a mixed outlook. July retail sales showed positive growth, but property investment and manufacturing data were less encouraging.
“The slowdown in investment and weak private sector confidence underscore the need for increased fiscal stimulus. There is significant interest among market participants in demand-side policy support,” stated a leading economist.
In the U.S. markets, the S&P 500 index rose by 0.4%, following one of its best trading days of the year, now sitting just 3.7% shy of its all-time high achieved last month. The Dow Jones Industrial Average increased by 242 points, or 0.6%, reclaiming the 40,000 mark for the first time in nearly two weeks. The Nasdaq composite inched up by less than 0.1%.
Bond market activity showed steadiness, with Treasury yields remaining stable after the U.S. government reported a 2.9% year-on-year increase in consumer prices for essential goods such as gasoline, food, and housing.
This data is expected to keep the Federal Reserve on track for a potential interest rate cut during its next meeting in September, following a period of elevated rates aimed at curbing inflation.
The yield on two-year Treasuries rose marginally to 3.95%. Overall, the S&P 500 gained 20.78 points, closing at 5,455.21, while the Dow reached 40,008.39 with a 242.75-point gain, and the Nasdaq composite climbed to 17,192.60, adding 4.99 points.
In energy markets, benchmark U.S. crude rose by 23 cents to $77.21 a barrel, while Brent crude, the global standard, increased by 18 cents to $79.94 per barrel.
In the currency markets, the U.S. dollar strengthened against the Japanese yen, rising to 147.27 from 147.22 yen. The euro traded at $1.1014, slightly down from $1.1016.
