Gains on Wall St buoy Asian stocks

Japan’s Cabinet Office data showed the world’s fourth largest economy grew at an annual rate of 3.1% in the April-June period, marking a rebound from the contraction in the previous quarter

Tokyo: Asian shares were mostly higher Thursday after the latest update on US inflation came in almost exactly as economists expected, and data on Japan’s economy showed relatively healthy growth. Japan’s benchmark Nikkei 225 jumped 1.0 per cent in morning trading to 36,808.75. Australia’s S&P/ASX 200 rose 0.3 per cent to 7,871.90. Hong Kong’s Hang Seng added 0.5 per cent to 17,198.86, while the Shanghai Composite surged 1.0 per cent to 2,879.03. Trading was closed in South Korea for Liberation Day, a national holiday. Japan’s Cabinet Office data showed the world’s fourth largest economy grew at an annual rate of 3.1 per cent in the April-June period, marking a rebound from the contraction in the previous quarter.

The annual rate shows how much the economy would have grown or contracted, if the quarterly rate had continued for a year. Domestic demand grew a robust 3.5 per cent from the previous quarter on the back of healthy household consumption and private sector investments, as well as government investments. Exports grew a booming 5.9 per cent. A major element of uncertainty, which focused on currency fluctuations and interest rates lately, now turned to the political sector, as Japan’s ruling Liberal Democratic Party picks a new leader after Prime Minister Fumio Kishida announced he won’t seek re-election. Although the next prime minister is widely expected to be another Liberal Democrat, signaling continuity in Japan’s basic pro-US, pro-business policies, there is no clear successor waiting in line. Some analysts think a younger candidate will have a better chance wooing voter support, plummeting under Kishida.

On Wall Street, the S&P 500 rose 0.4 per cent to follow up on one of its best days of the year and climb within 3.7 per cent of its all-time high set last month. The Dow Jones Industrial Average gained 242 points, or 0.6 per cent, to finish a day above the 40,000 level for the first time in nearly two weeks. The Nasdaq composite edged up less than 0.1 per cent. Treasury yields were also relatively steady in the bond market after the US government said consumers paid prices that were 2.9 per cent higher last month for gasoline, food, shelter and other things than a year earlier.

The data should keep the Federal Reserve on track to cut its main interest rate at its next meeting in September, after keeping rates at an economy-crunching level in hopes of stifling inflation. The two-year Treasury yield edged up to 3.95 per cent from 3.94 per cent late Tuesday. All told, the S&P 500 rose 20.78 points to 5,455.21.