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TOKYO/ WAM
Asian stock markets rallied on Thursday, buoyed by Wall Street’s surge to all-time peaks overnight after a milder US inflation report raised expectations the Federal Reserve will deliver two interest rate cuts this year, Reuters reported. The dollar remained on the back foot, sagging to fresh multi-week lows against peers including the euro and sterling. US Treasury yields extended their retreat in Tokyo trading, sinking to six-week troughs. That helped the beaten-down yen to continue its recovery, even as data showed the Japanese economy contracted more than expected in the first quarter. Gold marched back towards record levels and crude oil added to gains after rebounding strongly overnight from a two-month trough. US data showed the consumer price index (CPI) rose by 0.3 percent in April, below an expected 0.4 percent gain, raising hopes the Fed can cut rates by 50 basis points this year, with the first quarter-point reduction fully priced for September. The data provided succour to markets after higher-than-expected US consumer prices in the first quarter had led to a sharp paring of rate cut bets and even stoked some worries of an additional hike. MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 1.5 percent. Hong Kong’s Hang Seng and Australia’s stock benchmark each rallied about 1.6 percent.
Japan’s Nikkei advanced more than 1 percent. Japan’s currency was a standout on Thursday, far outpacing gains against the dollar among major peers.
The dollar was last down 0.66 percent at 153.86 yen, from as high as 156.55 in the previous session.
The 10-year US Treasury yield, which the dollar-yen pair tends to track, slipped as low as 4.705 percent for the first time since April 5 in Tokyo trading. The dollar index, which measures the currency against the yen, euro, sterling and three other rivals, touched a five-week low of 104.07. The euro rose to US$1.0895, the highest since March 21, and sterling reached $1.27005 for the first time since 10th April. Also benefitting from broad dollar weakness, leading cryptocurrency bitcoin marked a fresh three-week top at US$66,694.89 following Wednesday’s more than 7 percent advance. Gold rose as high as US$2,397.32, pushing towards the all-time peak of $2,431.29 from April 12. Brent futures rose 39 cents, or 0.47 percent, to $83.14 a barrel, while US West Texas Intermediate crude (WTI) gained 42 cents, or 0.53 percent, to $79.05.