Rally in Asian markets

HONG KONG, AFP: Asian markets rallied Thursday as investors breathed a sigh of relief after data showed US inflation finally easing from a four-decade high, giving the Federal Reserve some room to slow down its pace of interest rate hikes.

The below-forecast reading on consumer prices came on the back of a sharp drop in energy costs and provided a much-needed boost to risk assets across the board.

Wall Street enjoyed a surge that saw the Nasdaq pile on more than 2% and push it into a technical bull market – having spiked more than 20% from its June lows – while the dollar dropped against its peers.

And Treasury yields – a gauge of future interest rates – dropped.

Trading floors had been nervous going into Wednesday’s release, as many had feared a forecast-topping figure would beef up pressure on the Fed to announce another bumper rate hike at its September meeting. Fears that the bank’s monetary tightening drive would send the world’s top economy into recession have dragged markets lower for months, with the mood already darkened by several issues including the Ukraine war, supply chain snarls and worsening China-US relations.

The positive energy from New York filtered through to Asia, where Hong Kong jumped more than 2%, while Shanghai, Sydney, Seoul, Taipei and Jakarta all rose more than 1%. Manila soared more than 3% with Singapore, Wellington and Mumbai also up.

Paris and Frankfurt rose in the morning, though London was flat.

But while sentiment was positive, analysts warned against getting over-excited as inflation was still high and would take some time to get under control, while figures on producer prices – which could have a bearing on future CPI readings – will also be closely watched.