Asia stocks jump on US inflation relief, BoK surprises by keeping rates steady

Investing.com– Asian stocks rose sharply on Thursday as markets cheered a softer U.S. inflation reading, while South Korea’s central bank left interest rates unchanged despite expectations of a cut amid political unrest.

Regional markets took cues from an overnight surge in Wall Street after Wednesday’s inflation data. U.S. stock futures were largely steady in Asia hours on Thursday.

Market focus now shifts to the due next week. BOJ Governor Kazuo Ueda said on Wednesday that a rate hike is possible if economic and price conditions continue to improve.

Japan’s rose 0.4% on Thursday but lagged its peers as a rising yen amid rate hike speculations created downward pressure. 

A stronger yen makes Japanese goods more expensive abroad, reducing demand and profit margins for exporters. This weighs on stock prices, dragging down the overall market indices.

Asia stocks cheer soft US CPI, Australian shares lead gains

U.S.  for December rose by 0.4%, largely in line with economists’ expectations, while the Federal Reserve’s closely watched –  was slower than anticipated.

This brought rate-cut expectations back on the table, boosting stocks across the globe. 

Australia’s  jumped 1.4%. Data on Thursday showed that Australia’s expanded far more than anticipated in December, implying the labor market was still amply hot.

In China, markets were cautious ahead of a local data barrage due on Friday. China’s  index inched up 0.1%, and the  index rose 0.2%. Hong Kong’s  index gained 0.7%.

Focus this week will be on data providing China’s economic performance at the close of 2024. The country’s full-year 2024  figures are due on Friday.  Additionally, December’s data, and  figures are also due on Friday.

Elsewhere, the Philippines’ climbed more than 1%, and Thailand’s rose 0.5%. 

Singapore’s gained 0.6%, while India’s edged 0.1% higher.

BoK stands pat on rates amid ongoing political crisis

South Korea’s index jumped 1.2% despite the central bank holding rates against expectations of a cut.

The Bank of Korea (BoK) announced on Thursday that it would maintain its at 3.00%, contrary to widespread expectations of a 25 basis point cut.

This decision comes amid a significant political crisis following the arrest of President Yoon Suk Yeol, who was detained after attempting to impose martial law.

The BoK’s choice to hold rates steady appears to be an effort to stabilize the South Korean won, which has recently plummeted to a 15-year low against the U.S. dollar, exacerbating economic uncertainties.