Asia report: Markets mixed after US inflation comes in hot

(Sharecast News) - Asia-Pacific markets finished in a mixed but mostly higher state on Thursday, with diverging from Wall Street's decline after a hotter-than-expected US inflation report dampened expectations for Federal Reserve rate cuts.

Australian stocks reached a record high before paring gains, while Chinese and Hong Kong indexes slipped.

"Asian stocks surged as US-Russia negotiations fuelled optimism for resolving the Ukraine crisis, while a brighter outlook for Chinese markets further boosted risk appetite," said TickMill market strategy partner Patrick Munnelly.

"The Asian equities index climbed for a second straight day, led by gains in Japan and Hong Kong.

"European stock futures advanced around 1%, while S&P 500 futures followed suit, however, those gains have reversed to see S&P futures turn negative in the overnight session."

Munnelly noted that global markets largely shrugged off higher-than-expected US inflation data, which tempered hopes for a rate cut, instead focusing on Trump's peace talks with Russia regarding Ukraine.

"The euro strengthened by 0.5% against the dollar, outperforming several G10 currencies.

"This uptick in risk appetite comes after a challenging period for the Asian regional stock index, which lagged behind global peers earlier this year due to Trump's tariff threats, a stronger currency, and limited domestic policy stimulus in China.

"However, recent progress in AI technology has driven gains in Chinese stocks."

Most markets rise despite Wall Street's overnight losses

Japan's Nikkei 225 led regional gains, climbing 1.28% to 39,461.47, with Trend Micro soaring 16.05% and M3 up 8.8%.

The broader Topix index added 1.18%.

South Korea's Kospi 100 also advanced, rising 1.06% to 2,568.60, driven by double-digit gains in Lotte Chemical and LS Industrial Systems.

Australia's S&P/ASX 200 briefly touched an all-time intraday high of 8,575.2 before closing nearly flat at 8,540.00.

Temple & Webster Group surged 13.03%, leading gains.

New Zealand's S&P/NZX 50 dipped 0.06% to 12,905.98, weighed down by declines in Vista Group International and Mercury NZ.

Chinese markets struggled, with the Shanghai Composite falling 0.42% to 3,332.48 and the Shenzhen Component slipping 0.77% to 10,626.62.

Hong Kong's Hang Seng Index lost 0.2% to 21,814.37, as BYD Electronic International and Xiaomi declined sharply.

In currency markets, the dollar was last down 0.27% on the yen, trading at JPY 154.01, while it strengthened 0.2% against the Aussie to AUD 1.5956, and advanced 0.09% on the Kiwi, changing hands at NZD 1.7740.

Oil prices were weaker, with Brent crude futures last down 1.1% on ICE at $74.35 per barrel, and the NYMEX quote for West Texas Intermediate off 1.18% at $70.53.

US inflation, Fed trajectory in focus

US stocks fell sharply overnight as stronger-than-expected inflation data raised doubts about the Federal Reserve's timeline for interest rate cuts.

The S&P 500 declined, while bond yields surged after January's consumer price index showed inflation remained stubbornly high.

The latest figures tempered expectations that the Fed would ease policy soon, with some analysts even speculating that the central bank could be forced to raise rates instead.

Federal Reserve chair Jerome Powell, speaking before the House Committee on Financial Services, acknowledged that while progress has been made toward the Fed's 2% inflation target, it had not yet been fully achieved.

Reporting by Josh White for Sharecast.com.