Asian shares mostly rose on Thursday, following a positive trend on Wall Street driven by an encouraging update on U.S. inflation. Japan's benchmark Nikkei 225 added 0.2% to 38,532.18, with Bank of Japan data showing a 3.8% increase in wholesale prices in December compared to the previous year, potentially leading to pressure on the central bank to raise interest rates at an upcoming monetary policy meeting.
Shares in China displayed mixed results, with the Hang Seng in Hong Kong gaining 0.4% to 19,368.04, while the Shanghai Composite index lost 0.2% to 3,220.52. Australia's S&P/ASX 200 surged 1.3% to 8,322.50, and South Korea's Kospi gained 1.2% to 2,526.28.
On Wall Street, strong profit reports from Wells Fargo and other major U.S. banks contributed to significant gains, with the S&P 500 rising 1.8% to 5,949.91, the Dow Jones Industrial Average rallying 1.7% to 43,221.55, and the Nasdaq composite leaping 2.5% to 19,511.23. Bank stocks, including Wells Fargo, Citigroup, and Goldman Sachs, saw notable increases following better-than-expected profits for the last quarter of 2024.
Treasury yields eased after a report indicated a 2.9% acceleration in overall inflation in December, up from 2.7% in November. However, underlying inflation trends excluding food and energy prices slowed to 3.2% in December, providing some relief. The Federal Reserve focuses more on this underlying number, aiming to reach its 2% inflation target.
Market volatility has been observed as traders adjust their forecasts for the Fed's interest rate decisions in 2025. While the recent data may not prompt an immediate rate cut, it could pave the way for future adjustments if inflationary pressures ease. Rising Treasury yields can impact stock prices by diverting investor interest to bonds, potentially leading to stock price adjustments or increased corporate profits.
In early trading, benchmark U.S. crude oil prices rose slightly to $78.86 a barrel, while Brent crude, the international standard, was up at $82.18 a barrel. The U.S. dollar weakened against the Japanese yen and the euro.
