Asian equities diverge as Wall Street extends record run on cooler inflation

Asian stock markets opened Thursday with no clear direction, reflecting a cautious mood after Wall Street notched fresh records on the back of easing U.S. inflation and renewed expectations for Federal Reserve rate cuts.

Japan and South Korea edge higher

In Tokyo, the benchmark Nikkei 225 advanced 0.23% during early trading, while the broader Topix slipped 0.18%. Investors weighed overnight U.S. gains against lingering concerns about domestic wage growth and the yen’s persistent weakness.

South Korea tracked much of Wall Street’s strength. Seoul’s Kospi added 0.67%, supported by semiconductor and electric-vehicle battery names. The technology-heavy Kosdaq followed with a 0.2% uptick.

Australia softens; Hong Kong futures point lower

Australia’s S&P/ASX 200 fell 0.29%, pressured by energy stocks after crude oil prices slipped overnight. Mining majors also retreated, mirroring lower iron-ore futures.

Hong Kong’s session was expected to begin in negative territory. Futures for the Hang Seng Index stood at 25,994, below the prior close of 26,200.26, signaling investor caution ahead of China’s next round of economic data.

Calm in U.S. futures as inflation gauge looms

U.S. equity futures were little changed during Asian trading hours. Market participants awaited the August personal consumption expenditures (PCE) index, the Federal Reserve’s preferred inflation metric. A continued moderation would bolster the case for a rate reduction later this year, an outcome traders increasingly priced in after Wednesday’s producer price figures showed a further slowdown.

The prospect of easier monetary policy has been a key driver of the recent rally. According to data compiled by CME Group, fed funds futures now assign a better-than-even chance of a first cut in December.

Wall Street sets more milestones

Overnight, the broad S&P 500 rose 0.3% to close at 6,532.04, surpassing its previous record. The index briefly touched an intraday high of 6,555.97 before paring some gains. The Nasdaq Composite inched up 0.03% to 21,886.06, also a record close.

The Dow Jones Industrial Average diverged, slipping 0.48% or 220.42 points to 45,490.92. A decline in Apple shares weighed on the 30-stock gauge after the company’s latest iPhone lineup failed to meet some analysts’ expectations for breakthrough features.

Imagem: Internet

Drivers: cooling prices and rate-cut hopes

Renewed optimism over inflation followed the U.S. producer price index (PPI) report for August, which indicated a slower pace of wholesale price increases. Lower upstream costs often herald subdued consumer inflation, strengthening the argument for the Fed to dial back its restrictive stance.

An additional confirmation may come from the PCE data due later Thursday. Economists surveyed by Reuters forecast a monthly rise of 0.2%, unchanged from July, with the annual rate slipping toward the Fed’s 2% target.

Sector highlights across the region

• Technology: Chipmakers in Japan and South Korea outperformed, mirroring gains in U.S. semiconductor names after a brokerage upgraded its outlook on AI-related demand.
• Financials: Australian banks traded flat as traders assessed the impact of potential rate cuts on net interest margins.
• Energy: Shares of regional oil producers declined alongside a retreat in Brent crude toward USD 83 a barrel.

Outlook

Market direction for the remainder of the week hinges on U.S. inflation data and subsequent commentary from Federal Reserve officials. A softer-than-expected PCE reading could reinforce risk appetite and extend the global equity rally. Conversely, any upside surprise may revive concerns about sticky inflation, prompting a reassessment of policy trajectories across Asia-Pacific central banks.

See our latest Finance News Update, visit our Finance News Update section.

Image credit: Getty Images