Asia report: Stocks rise after better-than-expected US CPI

Markets closed higher in Asia on Thursday, with Hong Kong’s bourse leading the gains, as investors digested a better-than-expected inflation report out of the US overnight.

In Japan, markets were closed for the Mountain Day holiday, as the yen strengthened 0.22% on the dollar to last trade at JPY 132.60.

SoftBank said earlier that it would shrink its holding in Chinese technology behemoth Alibaba Group by settling prepaid forward contracts over 242 million American depository receipts early.

The company said it would add about JPY 4.6trn to its pre-tax gains.

“By settling these contracts early, SBG will be able to eliminate concerns about future cash outflows, and furthermore, reduce costs associated with these prepaid forward contracts,” SoftBank said in a statement.

“These will further strengthen our defence against the severe market environment.”

On the mainland, the Shanghai Composite rose 1.6% to 3,281.67, and the technology-centric Shenzhen Component jumped 2.05% to 12,474.03.

South Korea’s Kospi was ahead 1.73% at 2,523.78, while the Hang Seng Index in Hong Kong was 2.4% firmer at 20,082.43.

Embattled Chinese property developer Longfor Group closed 5.74% higher, after it confirmed on Wednesday that it was not deferring a debt payment.

Its shares plunged earlier in the week on the prospect of it missing a due date on its indebtedness, sending its shares tumbling.

Seoul’s blue-chip technology stocks were in the green, with Samsung Electronics up 1.35%, and SK Hynix rising 1.63%.

Sentiment in the region was buoyed by fresh inflation data out of the United States late on Wednesday, with consumer prices rising 8.5% year-on-year in July.

That was less than the 8.7% jump pencilled in by economists polled by Reuters, and was down from the fresh 40-year high of 9.1% set in June.

“US markets underwent a strong session with the Nasdaq 100 leading the way higher, after CPI fell to 8.5% in July, while core prices remained steady at 5.9%, a trend that has continued with strong gains in Asia markets, which look set to translate into a higher European open,” said CMC Markets chief market analyst Michael Hewson on Thursday morning.

“The bigger-than-expected fall in the headline number, along with the weaker than expected core reading, has prompted the hope that the Federal Reserve may not need to be as aggressive on rate hikes when it meets to raise rates in September.”

Hewson noted that as a result, rate rise expectations fell to 50-basis points from 75 points, prompting a decline in US two-year yields, though some of the fall in yields was pared back after Chicago Fed president Charles Evans played down the importance of a single CPI reading.

“He said he still expects to see the Fed Funds rate at 3.75% to 4% by the end of 2023.”

Oil prices were higher as the region went to bed, with Brent crude futures last up 0.84% on ICE at $98.22 per barrel, and the NYMEX quote for West Texas Intermediate rising 0.99% to $92.84.

In Australia, the S&P/ASX 200 added 1.12% to 7,071.00, while across the Tasman Sea, New Zealand’s S&P/NZX 50 eked out gains of 0.07% to 11,760.01.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.14% at AUD 1.4085, and the Kiwi advancing 0.29% to NZD 1.5573.

Reporting by Josh White at Sharecast.com.