BEIJING (AP) – Asian stock markets surged yesterday after Wall Street rebounded from a slump caused by worse-than-forecast inflation numbers.
Japan’s market benchmark soared 3.5 per cent. Hong Kong jumped 3.9 per cent and Shanghai also rose. Benchmark United States (US) crude oil rose USD2 per barrel. US futures were also sharply higher.
Wall Street’s benchmark S&P 500 index tumbled on Thursday after the US consumer price index for September rose 8.2 per cent. But the market benchmark quickly rebounded to end up 2.6 per cent for its biggest daily gain in two and a half years.
The “sticker shock” of inflation was “shrugged off”, possibly because traders already expect another sharp interest rate hike from the Federal Reserve next month to cool surging prices, said Vishnu Varathan of Mizuho Bank in a report.
The Fed and central banks in Europe and Asia raised rates by unusually wide margins this year to contain inflation that is at multi-decade highs. Traders worry they might tip the global economy into recession.
Tokyo’s Nikkei 225 jumped to 27,161.46 and the Hang Seng in Hong Kong gained to 117,020.15.
The Shanghai Composite Index added 2.2 per cent to 3,083.76 and the Kospi in Seoul rose 2.3 per cent to 2,212.78.
Sydney’s S&P-ASX 200 rose 1.8 per cent to 6,758.80 and India’s Sensex opened up 1.7 per cent at 58,234.62. New Zealand and Southeast Asian markets also rose.
On Wall Street, the S&P 500 rose to 3,669.91 on Thursday following a swing of five percentage points from its lowest point during the day.
The Dow Jones Industrial Average rose 2.8 per cent at 30,038.72. The Nasdaq composite climbed 2.2 per cent at 10,649.15.
Also yesterday, China reported consumer inflation rose to a 29-month high of 2.8 per cent in September from the previous month’s 2.5 per cent. That was below the official ceiling of three per cent, leaving Beijing room to stimulate weak economic growth.
The US government data on Thursday showed inflation is spreading more widely across the economy. One component that is closely followed by policy makers and investors accelerated to its hottest level in 40 years.
The CPI was down from August’s 8.3-per-cent increase but not as much as expected.
Core inflation, which strips out volatile food and energy costs to show the long-term trend, accelerated to 6.6 per cent from August’s 6.3 per cent. Prices in September rose 0.6 per cent from the previous month.
That appeared likely to reinforce Fed plans for more big rate hikes. Most traders already expected a rise of up to three-quarters of a percentage point, three times its usual margin, at the US central bank’s next meeting in November.
Thursday’s data prompted some investors to expect yet another rate hike of the same size in December.
The yield on the 10-year Treasury, which helps set rates for mortgages and many other loans, rose to 3.96 per cent from 3.90 per cent on Wednesday. Earlier in the day, it topped four per cent.
The two-year yield, which moves more on expectations for Fed action, rose to 4.48 per cent from 4.29 per cent. It crossed above 4.50 per cent earlier in the morning.
In energy markets, benchmark US crude rose USD2.11 to USD89.38 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, gained 22 cents to USD94.79 per barrel in London.
The dollar rose to JPY147.46 from Thursday’s JPY147.17. It is trading at a 32-year high.
The euro declined to 97.77 cents from 97.85 cents.
