Investing.com – Most Asian stocks rose on Thursday, hitting record highs overnight on Wall Street, after some weak consumer inflation readings fueled bets on an interest rate cut in 2024.
Strong gains from Wall Street helped Asian markets overcome headwinds from China and Japan to some extent, especially as the Japanese economy contracted and the Biden administration raised some trade tariffs against Beijing.
Wall Street indexes ended at record highs on Wednesday as some softer-than-expected data showed traders increased expectations for a rate cut in September. US stock index futures also boosted Asian trade.
Japan’s Nikkei 225 index rises, but weak GDP limits growth
Japan’s index rose 0.6%, led by technology stocks that followed gains in their U.S. peers.
But other, more economically sensitive sectors retreated, as did the broader index, which has relatively less technology weighting than the Nikkei.
Data showed Japan’s economy contracted much more than expected in the first quarter of 2024 as persistent inflation and low wages eased sharply.
The economy, which had helped fuel growth in the past two quarters, also slowed sharply as uncertainty about Japan’s economy made businesses wary of investing.
The weak data raised further doubts about how much the Bank of Japan will be able to tighten policy this year. While loose policies bode well for stock markets, a weakening economy poses more headwinds.
China stocks fall amid trade and economic caution
China’s indexes and indices lagged their regional peers on Thursday, rising about 0.3% each. The Hong Kong index also rose 0.6%, relatively weaker than its Asian peers.
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Sentiment toward China has been dented by the Biden administration’s imposition of higher trade tariffs on several key Chinese sectors, namely electric vehicles, medicine and solar energy.
While the immediate economic impact of the tariffs was unclear, they angered Beijing, which threatened to retaliate. Such a move could reignite a trade war between the world’s largest economies.
Anticipation of new economic signals also influenced caution towards China. and the data should be on Friday.
Other Asian markets also rose. Australia was the best performer among its peers, rising 1.8% and approaching a record high. Data on Thursday also showed an unexpected rise in the Australian index, fueling hopes of a cooling labor market.
Gaining tech stocks lifted South Korean shares 0.8%.
Indian index futures are pointing to a positive opening, with technology stocks set to follow their global peers. However, growth is expected to be tempered by caution ahead of the 2024 Indian general elections.