NEW YORK: Asian equities rose as US-Russia talks spurred expectations for an end to the war in Ukraine. Risk sentiment was also stoked by the improving prospects for Chinese markets.
A gauge of equities in the region rose for a second day, with both Japanese and Hong Kong stocks advancing. Markets in Asia looked past the higher-than-expected US inflation figures - which eroded bets on rate cuts - with traders focusing on US President Donald Trump’s Ukraine peace talks with Russia. The CPI data had spurred a Treasuries rout on Wednesday (Feb 12).
The reversal in risk appetite came after the Asian regional gauge underperformed its global peers so far this year as Trump’s tariff threats, a stronger dollar and China’s lack of domestic policy stimulus weighed on the market. Chinese markets though have been lifted in recent weeks by an artificial intelligence breakthrough and signs of state support for the property sector.
Market sentiment got a boost from "the potential resolution of the Russia-Ukraine conflict, and the ongoing momentum in China’s tech sector,” said Charu Chanana, chief investment strategist for Saxo Markets Pte in Singapore. "The January CPI figures are often distorted due to annual costs such as insurance, which means the data may be sidelined for now, leaving Trump and his tariff announcements in the driving seat.”
Oil extended declines after US-Russia talks. An index of dollar strength was little changed. The yen was marginally stronger early Thursday after slumping more than one per cent Wednesday. Treasuries were little changed, while Australian and New Zealand bonds tracked Wednesday’s selloff.
Trump agreed in a phone call with Russian President Vladimir Putin to start negotiating an end to the war in Ukraine, sweeping aside three years of US policy and blindsiding European allies who feared the more conciliatory American stance amounted to a giveaway to the Russian leader.
In China, authorities are working on a proposal to help China Vanke Co. plug a funding gap of about 50 billion yuan (US$6.8 billion) this year, according to people familiar with the matter, highlighting the government’s support for the distressed developer.
In Asia, data set for release Thursday includes producer prices for Japan, an interest rate decision in the Philippines, while money supply data for China may be released any time through February 15. Elsewhere, India’s Prime Minister Narendra Modi is set to meet Donald Trump at the White House later Thursday.
On Wednesday, Treasury prices fell across the curve as investors adjusted expectations for Fed cuts following the inflation reading. The moves were mainly centred upon the higher-than-expected rise in US prices, which led traders to adjust bets on US rate cuts to now project the first and only reduction this year to come in December. Fed Chair Jerome Powell said that the inflation data showed that while the central bank has made substantial progress toward taming inflation, there is still more work to do.
The monthly gauge of the US consumer price index rose 0.5 per cent in January, the most since August 2023. Core CPI - which excludes food and energy costs - increased 0.4 per cent in January, also more than anticipated, Bureau of Labour Statistics figures showed Wednesday. Year-over-year gauges for both headline and core inflation also rose more than expected.
The S&P 500 closed down 0.3 per cent, paring most of a 1.1 per cent slide following the inflation data. Tesla Inc. led gains in megacaps and Meta Platforms Inc. rose for an 18th straight session. For the first time since November, the Nasdaq 100 erased an intraday loss of one per cent. In late hours, Cisco Systems Inc. jumped on an upbeat sales forecast.
Gold held a rally from its previous session, inching back toward its record high achieved earlier this week. - Bloomberg
