By Stella Qiu
SYDNEY (Reuters) – Sharemarkets in Japan, Taiwan and South Korea set records on Thursday, boosted by technology stocks, while investors wagered U.S. inflation data would be benign enough to ensure a rate cut next week and perhaps two more by year-end.
European stocks, however, braced for a more subdued open, with EUROSTOXX 50 futures little changed ahead of a rate decision from the European Central Bank. The ECB is widely expected to hold rates steady but the focus is on whether it will keep the door ajar for further policy easing.
Meanwhile, oil prices trimmed overnight gains after Poland downed suspected Russian drones in its airspace and as the U.S. pushed the EU to impose new sanctions on buyers of Russian oil. Gold also slipped further away from all-time highs.
Michael Brown, a senior research strategist at Pepperstone, said for stocks, the path of least resistance is clearly higher.
“The list of bullish catalysts is still piling up – solid economic growth, strong earnings growth & guidance, corporate buybacks gathering pace, calmer tones prevailing on trade and optimism around the AI theme having returned with a vengeance,” Brown said.
Japan’s Nikkei gained 1.2% to hit a record as tech, energy and utilities firms jumped. South Korean shares rose 0.6%, while the rally in Taiwan faded somewhat, with stocks last flat for the day.
SoftBank rose almost 10% after Stargate Project partner Oracle soared 36% overnight in its biggest one-day percentage gain since 1992 as the 48-year-old tech giant forecast a demand surge from AI firms for its cloud computing services.
Chinese blue chips jumped 1.8%, while Hong Kong’s Hang Seng index trimmed earlier losses to be off 0.3%. Both Nasdaq futures and S&P 500 futures were little changed.
Overnight, a benign reading on U.S. producer prices led markets to price in more chance of three interest rate cuts from the Federal Reserve this year. Investors have fully priced in a quarter-point move from the Fed at next week’s meeting, with an 8% chance of a 50 basis-point cut.
With PPI out of the way, investors are now focused on the consumer price index for August due out later in the day. A Reuters poll showed the headline CPI likely rose 2.9% from a year earlier, the biggest increase since January, while the core measure likely held at 3.1%.
“Unless CPI delivers a significant upside shock, investors are likely to maintain their dovish outlook,” said Julien Lafargue, chief market strategist at Barclays Private Bank.
“This shift in inflation dynamics could prove pivotal for the U.S. Fed, which now faces fewer constraints in pursuing a more aggressive rate-cutting cycle. With inflation appearing less of a threat, the Fed may find room to stimulate the economy more assertively.”
In foreign exchange, movement was muted with the U.S. dollar struggling for direction. The dollar index was last flat at 97.84, a touch above a seven-week trough of 97.25.
The Australian dollar hit a 10-month top of $0.6636 overnight before steadying at $0.6607 on Thursday.
In the bond market, 10-year Treasury yields edged up 2 basis points to 4.0531%, having fallen 4 bps overnight as a solid 10-year note auction alleviated some concern about investor appetite for long-term U.S. debt.
An even more telling gauge will be the Treasury’s $22 billion sale of 30-year bonds on Thursday. The 30-year yield rose 2 bps to 4.7028%, having come down more than 30 basis points since it briefly topped 5% a week ago.
In commodity markets, oil prices slipped on Thursday, having settled up over $1 overnight. U.S. crude eased 0.3% to $63.45 a barrel, while Brent was also down 0.3% at $67.26.
Spot gold prices slipped 0.3% to $3,630 an ounce.
(Reporting by Stella Qiu; Editing by Christopher Cushing and Sam Holmes)
