Asian stocks extend gains as US data fuels rate-cut expectations

Asian markets mostly advanced Thursday, extending a global rally after fresh U.S. inflation data strengthened bets that the Federal Reserve will deliver multiple interest rate cuts.

The optimism follows several signs of a cooling U.S. economy. Last week’s payrolls report showed job creation lagging forecasts, while revisions released earlier this week indicated more than 900,000 fewer jobs were created in the year through March than initially reported.

On Wednesday, the U.S. Labor Department said the producer price index (PPI) fell in August for the first time since April, surprising economists who had expected an increase. July’s reading was also revised lower.

The weaker numbers eased concerns that U.S. President Donald Trump’s tariff measures would reignite inflationary pressures. Instead, the figures gave the Fed more leeway to focus on slowing growth and employment weakness.

Attention now turns to Thursday’s consumer price index (CPI) release, considered pivotal in shaping the size and pace of upcoming rate moves. “The PPI reading was a red carpet unfurled straight to the September FOMC, with Powell cast as the reluctant guest of honour,” said Stephen Innes of SPI Asset Management, adding that tame CPI data could shift expectations from a modest 25-basis-point cut to a possible half-point reduction.

Vincenzo Vedda, global CIO at DWS, forecast up to five rate cuts by September 2026.

The upbeat outlook helped Wall Street’s S&P 500 notch another record close, with momentum spilling into Asia. Tokyo and Seoul hit fresh peaks, while Shanghai, Singapore, Taipei, and Manila also gained. Jakarta rebounded after the government unveiled a $12 billion stimulus plan, reversing losses linked to political turmoil earlier in the week.

However, not all markets joined the rally. Hong Kong slipped from a four-year high as technology shares came under pressure, while Sydney and Wellington also ended lower.

Key figures at around 0230 GMT

Tokyo - Nikkei 225: UP 1.0 percent at 44,271.92 (break)
Hong Kong - Hang Seng Index: DOWN 0.8 percent at 25,983.91
Shanghai - Composite: UP 0.3 percent at 3,824.10
Euro/dollar: UP at $1.1701 from $1.1696 on Wednesday
Pound/dollar: UP at $1.3531 from $1.3528
Dollar/yen: DOWN at 147.37 from 147.40 yen
Euro/pound: UP at 86.47 pence from 86.46 pence
West Texas Intermediate: FLAT at $63.67 per barrel
Brent North Sea Crude: FLAT at $67.49 per barrel
New York - Dow: DOWN 0.5 percent at 45,490.92 (close)
London - FTSE 100: DOWN 0.2 percent at 9,225.39 (close)