After Wall Street’s overnight gains and Japan’s GDP growth exceeding forecasts, Asian markets saw a rise in trading on Thursday.
The Topix increased by 0.5%, while Japan’s Nikkei 225 gained 0.2%. Futures for the Hong Kong Hang Seng index pointed to a lower opening. The markets in South Korea are closed for a holiday. The S&P/ASX 200 gained 0.3% in Australia.
Investors will also be monitoring other important economic statistics in the area, such as China’s retail sales, industrial output, and urban unemployment data for July, while Japan delivered its second-quarter GDP figures.
In the meantime, Indian stock exchanges are closed in honour of Independence Day in 2024.
GDP of Japan
In the April–June quarter, Japan’s economy grew at an annualized rate of 3.1%, which was quicker than anticipated. This was due to a pickup in consumption from the previous quarter.
Japan’s GDP grew 0.8% on a quarter-over-quarter basis, exceeding experts surveyed by Reuters’s projection of a 0.5% growth. Additionally, this was a reversal from the first quarter’s revised 0.6% decline.
US Stocks
Gains on Wall Street overnight as US inflation data exceeded market expectations also contributed to the rise in Asian markets. On Wednesday, the S&P 500 and the Nasdaq Composite continued to rise for the fifth session in a row.
The S&P 500 increased by 0.38%, or 20.78 points, to 5,455.21, whilst the Dow Jones Industrial Average gained 242.75 points, or 0.61%, to 40,008.39. At the close, the Nasdaq Composite was up 4.99 points, or 0.03%, at 17,192.60.
The price of an Alphabet share decreased 2.3%, the price of a Tesla share fell 3.1%, and the price of a Meta Platforms share lost 0.3%. The price of Nvidia’s stock dropped 1.7%, while Microsoft’s share price fell by 0.7%.
US Inflation
For the first time in almost three and a half years, the annual growth in inflation in the US decreased to below 3% in July, providing investors with confidence that the Federal Reserve will begin lowering US interest rates the following month.
In June, the consumer price index fell by 0.1%; however, it recovered by 0.2% last month. Through July, the CPI grew by 2.9% over the previous 12 months. The weakest growth since March 2021 and the first figure below 3%, according to Reuters, was recorded. In June, the annual growth rate of consumer prices was 3.0%.
According to the CME FedWatch Tool, money markets now project a 55% chance of a 25 basis point (bps) rate drop at the Fed’s meeting on September 17–18, Reuters reported. The traders were split almost evenly between a 25-bps and 50-bps decrease before the US inflation data.
Oil Prices
On Thursday, the price of crude oil increased, somewhat off its loss the day before.
While US West Texas Intermediate crude gained 0.3% to $77.21 per barrel, Brent crude futures increased by 0.2% to $79.93. On Wednesday, both benchmarks dropped by more than 1%.
Dollar
As US inflation slowed down on Thursday, the dollar weakened as the euro hovered around an eight-month high.
The dollar index, which compares the US currency to six competitors, was last seen at 102.6, not too dissimilar from the eight-month low of 102.15 it hit the previous week, according to Reuters. The index is headed for four straight weeks in the red, which it last experienced in March and April of 2023.
After the release of Japan’s Q2 GDP figures, the value of the yen remained stable at 147.26 per dollar.
