Equities Rally as Economic Data Boost Sentiment – Asia Market Wrap

Japan and China’s equities surged after Wall Street’s advances, as investors hailed a spate of optimistic economic statistics from the world’s three biggest countries.

Japan’s Topix index increased by up to 1.4%, China’s CSI 300 benchmark increased by more than 1%, and S&P 500 futures contracts jumped in Asian trading. The gains came as statistics showed Japan’s economy expanded faster than expected in the second quarter, as well as signs of stabilisation in China, such as slowing drops in property values and higher-than-expected retail sales.

The economic data led to optimism when US inflation data showed that core consumer prices in July increased at the weakest rate since 2021, clearing the way for expected Federal Reserve interest-rate reduction next month.

Traders are currently fully pricing in a 25 basis point reduction in September and 100 basis points of easing until the end of the year, indicating a level of confidence that the central bank will deliver one half-point cut in the final three meetings of 2024.