Stocks Reach New Highs as Wall Street Fear Index Drops – Asia Market Wrap

Stocks rose to a new high as an in-line US inflation reading alleviated price concerns and boosted betting on a Fed interest-rate drop in September.

The MSCI All Country World Index climbed 0.2% to an all-time high, mirroring Wall Street’s ascent to new highs, as money markets practically priced in a complete 25 basis point Fed decrease next month. A barometer of Asian shares rose 1.1% as the Nikkei-225 set a new record and Taiwan’s stock market rose. Shanghai stocks reached their highest level since December 2021.

Japan’s five-year government bond auction experienced the lowest demand ratio since 2020. The Yen dropped by 0.1%. Treasuries and the Dollar index remained stable.

While underlying US inflation rose to its highest level since the beginning of the year, a moderate increase in goods prices allayed fears that trade-related expenses might spill over into broader pricing pressures. With the CPI report behind them, investors will look to Friday’s US retail sales data for evidence that consumers are as optimistic as corporate earnings commentary implied.