Asian Markets Rally on US Inflation Cooldown, Japan’s Growth Surge

In today’s trading, Asian markets mostly mirror the positive sentiment of Wall Street. US consumer inflation slowed, fueling optimism for a significant interest rate cut, while Japan’s economic growth exceeded expectations. 

The stronger-than-expected growth figures from Japan contributed to the Asian market rally, with the Nikkei 225 index gaining momentum increasing by 1%, reaching 36,808.75

Japan, the world’s fourth-largest economy, reported a 0.8% GDP increase for the second quarter, surpassing forecasts. 

This news came shortly after Prime Minister Fumio Kishida announced his resignation next month, following declining poll ratings and several scandals.

Hiroyuki Ueno, chief strategist at SuMi Trust, remarked, “Consumer sentiment likely improved as real wages turned positive with promised wage increases being delivered. Furthermore, the recovery in shipments by some automakers, which had temporarily halted in May, probably supported consumer spending.”

In contrast, China’s economic outlook was less optimistic. Industrial production slowed, consumer spending slightly increased, and the unemployment rate increased in July. This data dampened hopes for a robust economic recovery in Asia’s largest market. 

Innes noted, “This snapshot of what was once a booming economy highlights the ongoing struggle with weak domestic demand. Government efforts to boost consumption and address recovery imbalances have not significantly improved the situation. Even substantial rate cuts seem unable to spur consumer spending when confidence in the economy or personal financial security is lacking.” 

Despite US inflation concerns, Shanghai posted gains in early trading, going up by 1.2% at 2,884.92. Hong Kong’s Hang Seng index also edged higher after a slow start at 1% reaching 17,281.35.

Meanwhile, South Korea’s Kospi is 0.88% higher, reaching 2,644.5 while Australia’s S&P/ASX 200 increased by 0.19% at 7,865.5.

ABOUT THE AUTHOR See More

Sophia Cruz

Financial Writer - Asian & European Desks

Sophia is an experienced writer, reporter and newsdesk member, mostly on the financial sectors. For the past 5 years Sophia has covered a wide variety of topics such as the financial markets, economics, technology, fin-tech and trading. Sophia has been a part of the FX Leaders team since 2017 and works on producing valuable content and information for traders of all levels of experience.

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