Asian Shares Rally On US Rate-cut Bets

(RTTNews) - Asian stocks rallied on Thursday after Wall Street's three major indexes notched record closes overnight on optimism that inflation is heading back in the right direction and that there will be two interest rate cuts by the U.S. Federal Reserve in 2024.

Gold was little changed in Asian trading after climbing by 1 percent on Wednesday, aided by a drop in the dollar index and U.S. bond yields. Oil extended gains from the previous session after data showed a larger-than-expected drawdown in I.S. crude inventories.

China's Shanghai Composite index finished marginally higher at 3,122.40. Shares of property developers jumped after reports of government plans to buy unsold homes.

Hong Kong's Hang Seng index rallied 1.59 percent to 19,376.53 as trading resumed after a holiday on Wednesday.

Japanese markets climbed as weak GDP data for the January-March quarter raised fresh doubts about the timing of BOJ rate hikes.

Data from the Cabinet Office revealed that Japan's preliminary GDP shrank at a 2 percent annual rate in the first quarter, faster than the 1.5 percent drop forecast by economists.

The Nikkei average climbed 1.39 percent to 38,920.26 while the broader Topix index closed 0.24 percent higher at 2,737.54.

Seoul stocks rose notably, with the Kospi average rising 0.83 percent to 2,753 on hopes for the Federal Reserve's possible rate cut.

Australian and New Zealand markets posted strong gains as government bonds rallied, pushing yields lower across the curve.

Australia's benchmark S&P ASX 200 jumped 1.65 percent to 7,881.30, logging its best single-day gain since December 14.

The broader All Ordinaries index added 1.61 percent to close at 8,150.10, led by mining, banks and real estate stocks.

The Australian dollar snapped its three-day winning streak after data showed unemployment climbed higher than expected last month, easing pressure on the Reserve Bank of Australia to hike rates again. The mixed jobs report also lifted expectations for rate cuts early next year.

Across the Tasman, New Zealand's benchmark S&P NZX-50 index jumped 1.75 percent to 11,728.06.

U.S. stocks rose sharply overnight as April retail sales unexpectedly came in flat, consumer prices rose less than expected and the core CPI slowed - boosting hopes for interest rate cuts by the Federal Reserve in the near future.

Treasury yields dipped as data showed consumer prices increased by 0.3 percent in April after rising by 0.4 percent in March. Economists had expected consumer prices to climb by another 0.4 percent. On an annual basis, the CPI slowed to 3.4 percent 3.5 percent, matching expectations.

Core inflation decelerated from 3.8 percent to 3.6 percent, marking the lowest reading ex-food and energy since April 2021.

The S&P 500 climbed 1.2 percent to break above 5,300 for the first time and the Dow rose 0.9 percent closer to the 40,000 milestone while the tech-heavy Nasdaq Composite surged 1.4 percent.