Investing.com– Asian stocks rose on Thursday as more signs of cooling U.S. inflation ramped up hopes for interest rate cuts by the Federal Reserve, while a slew of positive economic indicators from the region also aided sentiment.
Japanese and Chinese markets were the best performers in the region, after separate data prints showed Japan’s economy grew more than expected in the second quarter, while Chinese retail spending picked up in July.
Regional markets took a positive lead-in from Wall Street, where U.S. stock benchmarks hit a two-week high as consumer price index inflation data read cooler than expected. U.S. stock index futures also rose slightly in Asian trade, as the softer inflation data fueled growing conviction that the Fed will cut rates in September.
Japanese stocks rise as Q2 GDP beats expectations
Japan’s Nikkei 225 and TOPIX indexes rose around 0.9%, with both indexes near a two-week high.
Gross domestic product data showed Japan’s economy grew more than expected in the second quarter, aided by a rebound in private consumption. This rebound came as the bumper wage hikes negotiated by Japanese labor unions earlier this year began to spread around the country.
The positive GDP reading presented an improved outlook for the Japanese economy, especially after a steep contraction in the first quarter. It also tied into the Bank of Japan’s outlook that improved wages will drive increased spending in the coming months, underpinning local growth and supporting domestically-exposed stocks.
But a strong Japanese economy gives the BOJ more headroom to hike interest rates further, especially if inflation also increases. Such a trend could limit overall gains in Japanese markets.
