Asian Stocks Set to Climb After US CPI Lifts Mood: Markets Wrap

Optimism Flows from Wall Street to Asia

US consumer price index data came in cooler than expected, easing fears of runaway inflation and lifting spirits on Wall Street. Stocks there closed higher, with the Dow and S&P 500 posting solid advances amid bets that the Federal Reserve might hold steady on interest rates sooner than feared. This positive momentum is set to spill over into Asian trading sessions, where futures point to a bright open. Investors see the tame CPI reading as a green light for risk assets, particularly in export-heavy economies sensitive to US demand. The data underscores a resilient American economy without overheating, a scenario that bodes well for corporate earnings worldwide.

Market participants note that the CPI figures align with broader trends of moderating price pressures, even as wage growth remains firm. This balance has traders reassessing the path for monetary policy, with some now pricing in fewer rate hikes ahead. The ripple effect is evident in currency markets too, where the dollar softened slightly against regional currencies, providing a tailwind for Asian exporters. Overall, the mood shift from the US is injecting fresh capital into equities across the Pacific, setting the stage for what could be a robust start to the trading week.

Japan Leads the Charge Amid Political Clarity

Japan's stock market remains a standout performer, building on the euphoria from Prime Minister Sanae Takaichi's landslide election victory. The Nikkei 225 has been on a tear, recently surging over 5% to fresh record highs after her Liberal Democratic Party clinched a supermajority. This political stability has unlocked expectations for bold fiscal stimulus, tax cuts, and growth-oriented reforms, drawing in domestic and foreign investors alike. Sectors like financials, infrastructure, and defense are seeing particular interest, as Takaichi's pro-business agenda takes shape. Even with some volatility in bonds and the yen, the equity rally reflects deep confidence in Japan's economic rebound.

Analysts point to reduced uncertainty as a key driver, allowing markets to focus on fundamentals rather than headlines. Producer prices ticked up modestly in line with forecasts, adding to the sense of controlled expansion. Takaichi's mandate is also influencing regional dynamics, with neighboring economies watching closely for policy spillovers. This sentiment is echoing through futures, amplifying the US CPI lift.

"Takaichi’s decisive mandate and pro-growth agenda support continued upside in Japanese equities, particularly across financials, infrastructure, and defense sectors," noted a leading market strategist.

Mixed Signals Elsewhere in Asia Fuel Selective Bets

While Japan shines, other Asian markets show a patchwork of performances. Australia's ASX climbed supported by strong mining and banking earnings, with heavyweights like BHP and Rio Tinto leading the way despite tech sector weakness. South Korea's indices have surged dramatically over the past year, fueled by President Lee's 'Value Up' reforms targeting shareholder value and hitting ambitious benchmarks early. Tech plays continue to draw attention, with firms like Webzen and DEAR U forecasting robust revenue and earnings growth well above market averages. These high-growth stories in semiconductors and gaming underscore Asia's innovation edge amid global AI demand.

China presents a more cautious picture, with the Shanghai Composite dipping recently but still up sharply year-over-year. Hong Kong's Hang Seng has faced headwinds from profit-taking in tech, even as capital inflows and a firmer renminbi offer support. Commodities like gold and oil are stable, while bond yields reflect steady rate outlooks. Investors are navigating geopolitical tensions and US data dependencies, favoring quality names in tech and resources. The blend of US optimism and local catalysts suggests selective upside rather than broad gains.

Upcoming US unemployment claims will add another layer, potentially reinforcing the CPI-driven positivity. For now, Asia's markets are primed to climb, balancing domestic strengths with global cues.

In summary, cooler US CPI data has sparked widespread optimism, propelling Asian stocks higher with Japan at the forefront thanks to political wins and reform hopes. Selective opportunities in tech and resources across the region complement the bullish tone, though vigilance on mixed signals remains key.