(Bloomberg) — Asian shares drifted higher Thursday after US inflation data supported the case for another Federal Reserve rate cut next month.
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Stocks in Japan and Australia climbed, while futures for Hong Kong fell as a gauge of US-listed Chinese companies declined Wednesday. US equities were little changed as the post-election rally appeared to stall. The S&P 500 was flat and the tech-heavy Nasdaq 100 dropped 0.2%.
US consumer price data was in line with expectations on a headline basis, although the annualized three-month core rate picked up. Overall, the numbers were supportive of a potential Fed cut in mid-December with swaps traders increasing the likelihood to around 80% from about 56% earlier Wednesday.
The nuanced data led short-end bond yields to fall, with the two-year yield dropping five basis points to 4.29%. The 10-year rose two basis points to the highest level since July, while the 30-year climbed seven basis points to the highest since May. A gauge of the dollar advanced Wednesday as the greenback resumed its strengthening against major currencies.
“A December cut is still in the cards,” said Seema Shah at Principal Asset Management. “A hotter-than-expected inflation number could have convinced the Fed to stand pat at its next meeting.”
The yen stabilized early Thursday after slumping 0.6% Wednesday, its third session of weakening, to hit 155 per dollar for the first time since July. The drop has taken the yen near levels when Japanese authorities last intervened to prop up its currency, with the nation’s top foreign exchange official warning about the one-sided, sudden moves.
China, which recently unveiled plans to support its ailing economy, got more than $40 billion of bids for its first dollar bond issuance since 2021.
Hong Kong’s stock exchange will keep its markets open despite signs of severe weather.
Elsewhere, Bitcoin notched another record high, climbing above $93,000 for the first time, with traders exuberant over President-elect Donald Trump’s rhetorical support for crypto. The cryptocurrency was trading around $90,000 in early Asian trading.
In Asia, data set for release includes Australian unemployment, South Korean money supply and Thai consumer confidence.
