By Ankur Banerjee and Sinead Carew
SINGAPORE/NEW YORK (Reuters) – Asian stocks edged higher on Wall Street on Thursday and the dollar was soft as easing U.S. core inflation kept a potential Federal Reserve rate cut on the table and the yen rose to a one-month high. hiking stakes.
Oil prices rose after a bigger-than-expected decline in oil inventories added to concerns about possible supply disruptions due to new US sanctions on Russia’s energy trade.
On Wall Street, all three major indexes registered their biggest daily percentage gains since Nov. 6, the day after the US presidential election, led by strong gains at JPMorgan, BlackRock (NYSE: ) and Goldman Sachs.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.4%. China’s blue chip stocks rose 0.67% and Hong Kong’s rose 1.5%.
Shares in tech-heavy Taiwan rose 2% as investors awaited earnings from AI chip maker Taiwan Semiconductor Manufacturing Co, Asia’s most valuable company.
Overnight, data showed the consumer price index (CPI) rose in line with expectations at an annual rate of 2.9% in December, from 2.7% in November. But core inflation, which excludes food and energy prices, rose 3.2%, below forecasts for 3.3%.
Investors were particularly encouraged by the latest inflation figures after data on Tuesday showed US producer prices rose modestly in December.
“This report supports the view that rates cut prices have gone a little too far this year and when the data comes down again… further easing will be back on the table,” said Kyle Chapman, FX markets. Analyst at Ballinger Group.
The inflation report led traders to price in even odds that the Fed would cut interest rates twice before the end of this year.
That took some steam out of the greenback against most currencies at 109.03, which measures a lark against six other currencies.
“We expect a shallow FOMC easing cycle, although we think the short-term bullishness is overdone,” Eric Robertsen, global head and chief strategist at Standard Chartered, said at a media roundtable in Singapore.
“We see a higher US dollar, however, the path is expected to be volatile,” Robertsen said, noting that the theme of US exclusivity will be tested if tariffs lead to weaker growth in other regions.
With investors focused on the policies of President-elect Donald Trump as he returns to the White House on Monday, recent media reports of the new administration’s gradual implementation of tariffs will ease some concerns.
Analysts expect Trump’s policies to boost growth but also increase pressure on prices.
The Japanese yen remained on the upswing, reaching its highest in nearly a month, as traders saw a more than 70% chance the Bank of Japan will raise interest rates next week following comments from Governor Kazuo Ueda.
“While we expect the normally cautious Ueda to wait for clarity on US trade policy and confirmation of strong wage growth before the BOJ’s March meeting, we recognize that a hike is possible next week,” said Joseph Capurso, Commonwealth Bank of Head of International Economy. Australia (OTC:).
The yen was last at $155.675, up 0.5% on the day. The euro was steady at $1.02965, while sterling was slightly lower at $1.22335.
US Treasury yields edged lower after the inflation data, with the yield on the benchmark US 10-year bond falling 13.5 basis points to 4.653%. The last was 4.661% in Asian hours.
In energy markets, US crude rose 0.29% to $80.27 a barrel and was 0.17% higher at $82.17 a barrel.
Investors were watching developments in the Middle East as Israel stepped up strikes on Gaza hours after a ceasefire and a hostage-free deal was announced to end the fighting that began 15 months ago.
It hit a one-month high of $2,702.09 an ounce in Asia following a change in interest rate expectations.