Asian stock markets on Friday surged after Wall Street on Thursday rebounded from a slump caused by worse-than-forecast inflation numbers.
Markets in Taipei, Japan, Hong Kong and Shanghai all rose a day after Wall Street’s benchmark S&P 500 index tumbled following reports that the US consumer price index for last month rose 8.2 percent. The market benchmark quickly rebounded to end up 2.6 percent for its biggest daily gain in two-and-a-half years.
The “sticker shock” of inflation was “shrugged off,” possibly because traders already expect another sharp interest rate hike from the US Federal Reserve next month to cool surging prices, Mizuho Bank senior economist Vishnu Varathan wrote in a report.
Photo: Bloomberg
The Fed and central banks in Europe and Asia have raised rates by unusually wide margins this year to contain inflation that is at multi-decade highs. Traders worry they might tip the global economy into recession.
In Taipei, the TAIEX closed up 317.39 points, or 2.48 percent, at 13,128.12, posting a weekly loss of 4.19 percent. Turnover totaled NT$206.7 billion (US$6.48 billion).
Tokyo’s Nikkei 225 Index rose 3.25 percent to 27,090.76, falling 0.09 percent for the week, while the broader TOPIX rose 2.35 percent to 1,898.19, down 0.45 percent from a week earlier.
Hong Kong’s Hang Seng Index gained 1.21 percent to 16,587.69, but fell 6.5 percent weekly, while the Shanghai Composite Index added 1.84 percent to 3,071.99, rising 1.57 percent for the week.
In Seoul, the KOSPI Composite Index rose 2.3 percent to 2,212.55, falling 0.91 percent for the week, while Sydney’s S&P-ASX 200 gained 1.75 percent to 6,758.80, but was down 0.06 percent for the week. India’s SENSEX gained 1.2 percent to 57,919.97, down 0.47 percent weekly.
Also on Friday, China reported consumer inflation rose to a 29-month high of 2.8 percent last month from the previous month’s 2.5 percent. That was below the official ceiling of 3 percent, leaving Beijing room to stimulate weak economic growth.
The US government data on Thursday showed that inflation is spreading more widely across the economy. One component that is closely followed by policymakers and investors accelerated to its hottest level in 40 years.
The CPI was down from August’s 8.3 percent increase, but not as much as expected.
Core inflation, which strips out volatile food and energy costs to show the long-term trend, accelerated to 6.6 percent from August’s 6.3 percent. Prices last month rose 0.6 percent from the previous month.
That appeared likely to reinforce Fed plans for more big rate hikes. Most traders already expected a rise of up to three-quarters of a percentage point, three times its usual margin, at the Fed’s meeting next month.
Additional reporting by staff writer, with CNA
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