Investing.com-- Asian stocks rose sharply on Thursday as markets cheered a softer U.S. inflation reading, while South Korea’s central bank left interest rates unchanged despite expectations of a cut amid political unrest.
Regional markets took cues from an overnight surge in Wall Street after Wednesday's inflation data. U.S. stock futures were largely steady in Asia hours on Thursday.
Market focus now shifts to the Bank of Japan interest rate decision due next week. BOJ Governor Kazuo Ueda said on Wednesday that a rate hike is possible if economic and price conditions continue to improve.
Japan’s Nikkei 225 rose 0.4% on Thursday but lagged its peers as a rising yen amid rate hike speculations created downward pressure.
A stronger yen makes Japanese goods more expensive abroad, reducing demand and profit margins for exporters. This weighs on stock prices, dragging down the overall market indices.
Asia stocks cheer soft US CPI, Australian shares lead gains
U.S. Consumer Price Index (CPI) for December rose by 0.4%, largely in line with economists' expectations, while the Federal Reserve’s closely watched - underlying measure was slower than anticipated.
This brought rate-cut expectations back on the table, boosting stocks across the globe.
Australia’s S&P/ASX 200 jumped 1.4%. Data on Thursday showed that Australia's job market expanded far more than anticipated in December, implying the labor market was still amply hot.
In China, markets were cautious ahead of a local data barrage due on Friday. China’s Shanghai Shenzhen CSI 300 index inched up 0.1%, and the Shanghai Composite index rose 0.2%. Hong Kong’s Hang Seng index gained 0.7%.
Focus this week will be on data providing China’s economic performance at the close of 2024. The country’s full-year 2024 Gross Domestic Product (GDP) figures are due on Friday. Additionally, December's industrial production data, and retail sales figures are also due on Friday.
Elsewhere, the Philippines’ PSEi Composite climbed more than 1%, and Thailand’s SET Index rose 0.5%.
Singapore’s Straits Times Index gained 0.6%, while India's Nifty 50 Futures edged 0.1% higher.
BoK stands pat on rates amid ongoing political crisis
South Korea’s KOSPI index jumped 1.2% despite the central bank holding rates against expectations of a cut.
The Bank of Korea (BoK) announced on Thursday that it would maintain its policy interest rate at 3.00%, contrary to widespread expectations of a 25 basis point cut.
This decision comes amid a significant political crisis following the arrest of President Yoon Suk Yeol, who was detained after attempting to impose martial law.
The BoK's choice to hold rates steady appears to be an effort to stabilize the South Korean won, which has recently plummeted to a 15-year low against the U.S. dollar, exacerbating economic uncertainties.