Asian shares showed a mostly positive trend on Thursday following the release of the latest U.S. inflation data, which aligned closely with economists' expectations. Additionally, Japan's economic data indicated healthy growth, contributing to the upbeat market sentiment.
The Nikkei 225 in Japan surged by 1.0% in morning trading, reaching 36,808.75, while Australia's S&P/ASX 200 rose by 0.3% to 7,871.90. Hong Kong's Hang Seng index added 0.5% to 17,198.86, and the Shanghai Composite saw a significant increase of 1.0% to 2,879.03. Notably, trading was closed in South Korea due to Liberation Day, a national holiday.
Japan's Cabinet Office released data showing that the country's economy grew at an annual rate of 3.1% in the April-June period, rebounding from the previous quarter's contraction. The growth was driven by a robust 3.5% increase in domestic demand, supported by healthy household consumption, private sector investments, and government spending. Exports also saw a substantial rise of 5.9%.
Market focus has shifted to the political landscape in Japan as the ruling Liberal Democratic Party prepares to select a new leader following Prime Minister Fumio Kishida's decision not to seek re-election. While continuity in pro-U.S. and pro-business policies is expected, the absence of a clear successor has introduced some uncertainty.
On Wall Street, the S&P 500 climbed 0.4%, nearing its previous all-time high, while the Dow Jones Industrial Average gained 0.6% to surpass the 40,000 mark for the first time in nearly two weeks. The Nasdaq composite also edged up slightly.
Treasury yields remained stable in the bond market after the U.S. government reported a 2.9% year-on-year increase in consumer prices for essentials like gasoline, food, and shelter. This data is likely to influence the Federal Reserve's decision to potentially lower interest rates at its upcoming September meeting to address inflation concerns.
In energy trading, benchmark U.S. crude oil rose by 28 cents to $77.26 a barrel, while Brent crude, the international standard, increased by 26 cents to $80.02 a barrel. Currency markets saw the U.S. dollar strengthening against the Japanese yen and the euro slightly declining against the dollar.
