Asian Shares Rally After U.S., Chinese Data

Asian stocks rose sharply on Wednesday as signs of cooling U.S. inflation bolstered hopes of a pause in interest rate hikes and China reported strong industrial output and retail sales data.

A drop in the dollar index and Treasury yields lifted bullion prices, while oil edged up slightly after ending little changed on Tuesday.

Chinese shares rose on the back of largely positive economic data and a decision by the country’s central bank to boost liquidity injection through seven-day reverse repos aimed at shoring up sluggish economic growth.

Traders also looked ahead to a meeting between Chinese President Xi Jinping and his U.S. counterpart Joe Biden later in the day, though expectations remain low due to disagreement over a range of issues, including Taiwan, the South China Sea, the Israel-Hamas war and Russia’s invasion of Ukraine.

China’s Shanghai Composite Index rose 0.6 percent to 3,072.83, while Hong Kong’s Hang Seng Index spiked 3.9 percent to 18,079, breaking above its 50-day moving average on the back of strength in heavyweight tech stocks. Tencent Holdings surged 4.8 percent ahead of its earnings release.

Data showed earlier in the day that Chinese industrial production and retail sales grew more than expected in October, while fixed asset investment slowed and property sales continued to decline.

Japanese markets rose sharply despite data suggesting that the economy slipped back into reverse over the summer. Third quarter GDP shrank 0.5 percent from the previous quarter versus expectations for a drop of 0.1 percent.

The Nikkei 225 Index soared 2.5 percent to 33,519.70, closing above the psychological 33,000 level for the first time in nearly two months as the GDP reading backed the case for more support from the government and the Bank of Japan. The broader Topix Index settled 1.2 percent higher at 2,373.22.

Semiconductor-related shares topped the gainers list, with Tokyo Electron, Screen Holdings and Advantest spiking 4-7 percent. Tech investor SoftBank Group surged 5.2 percent.

Idemitsu Kosan shares soared 18.3 percent after the refiner raised its profit forecast and announced a share split. Conglomerate Toshiba ended little changed after it posted a net loss of ¥52.14 billion ($344 million) for the six months ended September.

Seoul stocks closed higher on hopes of an end to U.S. rate hikes. The Kospi jumped 2.2 percent to 2,486.67, led by battery makers, tech and auto stocks. Samsung Electronics, LG Energy Solution and Hyundai Motor rallied 2-4 percent.

Australian markets closed near a two-month high, led by mining, tech and real estate stocks. Investors shrugged off data showing that Australian wages accelerated at the fastest pace in over 14 years in the three months through September.

The benchmark index S&P/ASX 200 Index closed 1.4 percent higher at 7,105.90, marking its highest closing level since September 20 and the largest single-day gain since September 15. The broader All Ordinaries Index settled 1.5 percent higher at 7,316.70.

Across the Tasman, New Zealand benchmark S&P/NZX 50 Index rose 1.6 percent to 11,352.84, marking the highest closing level since September 25.

U.S. stocks rallied overnight to build on their strong November gains as tamer than expected inflation data bolstered the view that the Fed is probably done with rate hikes.

The 10-year Treasury yield tumbled below 4.5 percent after data showed the annual rate of consumer price growth slowed to 3.2 percent in October from 3.7 percent in September. Economists had expected the pace of growth to decelerate to 3.3 percent.

Core consumer prices were up by 4.0 percent year-on-year, reflecting the smallest year-over-year increase since September 2021.

The tech-heavy Nasdaq Composite soared 2.4 percent to hit over three-month high while the Dow and the S&P 500 climbed 1.4 percent and 1.9 percent, respectively to set new two-month closing highs.

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