EQUITIES
Asia-Pacific markets climbed on Thursday after a better-than-expected inflation report in the U.S. sent stocks spiralling higher.
Hong Kong’s Hang Seng index led the gains regionally as it advanced 1.78%, with the mainland Shanghai Composite ticked up 1.18% higher.
The KOSPI in South Korea jumped 1.28%, the Australia’s S&P/ASX 200 rose 0.87%, and Singapore’s FTSE Straits Times Index added 0.41%.
Japan’s market is closed for a holiday Thursday.
Overnight on Wall Street, the Dow Jones Industrial Average jumped 1.63%, to close at 33,309.51, while the S&P 500 rose 2.13%, to 4,210.24. The Nasdaq Composite soared 2.89% to finish at 12,854.81.
OIL
Oil prices rebounded from losses early in the session after encouraging figures on U.S. gasoline demand and as lower-than-expected U.S. inflation data drove investors into riskier assets. Though more crude supply anticipated to enter market kept the price in check.
Brent crude futures rose 0.16% to $97.22 a barrel, while U.S. West Texas Intermediate crude futures added 0.15% to $91.70 per barrel.
Overnight, the U.S. crude settled up 1.58% at $91.93 per barrel and Brent finished at $97.40, up 1.13% for the day.
U.S. crude oil stocks rose by 5.5 million barrels in the most recent week, the U.S. Energy Information Administration said, more than the expected increase of 73,000 barrels. Meanwhile gasoline product supplied rose in the most recent week to 9.1 million barrels per day, though that figure still shows demand down 6% over the past four weeks compared with the year-ago period.
Flows on the Russia-to-Europe Druzhba pipeline also reportedly had resumed earlier this week.
Monthly oil reports from the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC)are expected later today.
CURRENCIES
The U.S. dollar index was at 105.386 after plunging 1% in the previous session, the most in five months following the U.S. inflation report. Commodity currencies rallied on improved risk appetite from hopes of a soft landing. Bitcoin which has also traded in line with risk assets, was testing its recent highs.
U.S. Treasuries, which had pulled back from an earlier plunge in yields as traders reassessed the Fed's rate path, were not trading in early Asia on Thursday due to a holiday in Japan.
GOLD
Spot gold dropped 0.40% to $1,785.00 an ounce, as hawkish remarks from U.S. Federal Reserve officials dampened hopes of a let-up in aggressive policy tightening after the inflation data. Gold hit a one-month high in the previous session before losing ground.
ECONOMIC OUTLOOK
Asian shares traded broadly higher on Thursday, reversing Wednesday's losses, as investors’ risk appetite recovered following lower-than-expected inflation data from the U.S., which encouraged bets of less aggressive rate hikes from the Federal Reserve. The dollar remained bruised after its biggest plunge in five months.
The U.S. CPI data, which measures inflation, came in at 8.5% in July, below the market’s forecast of 8.7%, suggesting that the country’s economy was recovering faster than expected. The July result was lower than expectations due to a sharp drop in the cost of petrol, causing markets to reposition on hopes that inflation was peaking.
Slowing U.S. inflation may have opened the door for the Federal Reserve to temper the pace of coming interest rate hikes, but policymakers left no doubt they will continue to tighten monetary policy until price pressures are fully broken. Traders now price in a 50-basis point rate hike next month, compared with the 75-basis point increase that had been expected before the inflation report.
Gains in Chinese shares were watched as new COVID-19 lockdowns in more Chinese cities, including the eastern export hub of Yiwu, which dented sentiment.
