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Asian markets rose on Thursday after US inflation data paved the way for another interest rate cut from the Federal Reserve next week.
Inflation in November in the world's largest economy was 2.7 percent, higher than the previous month but in line with market expectations, boosting expectations for a quarter-point interest rate cut in December.
Stock markets in Asia, led by Japan and China, were supported by the gains achieved by US stocks, and Asian currencies strengthened against the dollar as investors prepared for lower interest rates.
The Nikkei 225 index, which includes shares of export companies in Japan, rose 1.3 percent by midday, while the CSI 300 index of blue-chip stocks in China rose 0.8 percent, exceeding 4,000 points. The Hang Seng Index in Hong Kong rose 1.5 percent.
Yields on 10-year Chinese government bonds fell by about 2 basis points to 1.809 percent, widening the spread against US 10-year yields to nearly 250 basis points. Bond yields move inversely with prices. The offshore renminbi was hovering at 7.27 renminbi to the dollar.
“The moves in Asian markets have been fairly strong and risky,” said Mitul Kotecha, head of emerging markets and macro strategy at Barclays. “Strong reaction in the US and especially in technology stocks – Asian markets are reacting to that. Inflation numbers are playing a role in continued easing – it's a not too hot and not too cold scenario and that's good for the markets.
The Nasdaq 100 index closed up 1.9 percent, and the Nasdaq Composite Index, dominated by technology stocks, closed above 20,000 points for the first time as American technology stocks rose.
“In Japan, Korea and Taiwan, the rise of US big tech is providing a boost in the semiconductor industry,” said Jason Lowe, head of Asia-Pacific equity and derivatives strategy at BNP Paribas.
The dollar fell 0.15 percent against a basket of currencies, including the British pound and the Japanese yen. The currency has risen since Donald Trump won the presidential election in November, driven by bets that he will impose more trade tariffs and ease fiscal policy.
Analysts added that other factors were behind some of the Chinese gains.
“For Hong Kong and China stocks, investors have become more positive about the rising expectations for the outcome of the Central Economic Work Conference after the pro-growth Politburo statement,” Lowe said.
The Politburo of the Communist Party, led by Xi Jinping, It changed its position on monetary policy Monday to “somewhat loose” from “cautious” for the first time in 14 years.
Taiwan's main stock index rose 0.6 percent, while South Korea's KOSPI rose 1.1 percent.
Additional reporting from Cheng Ling in Hong Kong
