Asian markets surge as Micron earnings soar and US inflation slows, lifting investor sentiment across Tokyo, Hong Kong, and Shanghai

Asian markets surged on Friday as investors cheered blockbuster earnings from Micron Technology and a US inflation report that fell below expectations, raising hopes of an interest rate cut next month.

Also read: Asian markets fall on US rate concerns, oil rises after attack

The rally lifted stock exchanges across Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Singapore, Taipei, Mumbai, Bangkok, and Wellington.

Micron Technology, a leading chip manufacturer, reported quarterly profits of $5.2 billion, nearly tripling previous figures, as the company benefitted from a surge in artificial intelligence-related demand.

The firm also issued an upbeat outlook for the current quarter, alleviating fears of a potential tech bubble that has been causing recent market jitters.

The positive momentum followed data showing US inflation slowed to its lowest level since July, well below forecasts.

The figures prompted investors to reassess the likelihood of further Federal Reserve rate cuts, which had been tempered by market speculation after the Fed’s recent policy decision.

Analysts cautioned that the US government shutdown earlier this year may have distorted the data, with Bank of America advising “taking the report with a large grain of salt.”

In Japan, the Bank of Japan raised borrowing costs to their highest level since 1995, hours after data showed November inflation held steady at three per cent, above the central bank’s two per cent target.

The yen fell against the dollar, reaching 156.71 per dollar before recovering to 155.90, while yields on 10-year Japanese government bonds hit a 26-year high.

Prime Minister Sanae Takaichi, in office since October, has pledged disciplined fiscal measures to combat inflation.

Financial analysts noted that the combination of BoJ rate hikes and potential Fed cuts could gradually narrow the yield gap that has supported the dollar’s strength against the yen.

Fabien Yip of IG Markets suggested that this convergence may exert sustained downward pressure on the dollar throughout the year.

Global equity indices responded positively.

Tokyo’s Nikkei 225 gained 1.0 per cent to 49,507.21, Hong Kong’s Hang Seng Index rose 0.8 per cent to 25,690.53, and Shanghai’s Composite added 0.4 per cent to 3,890.45. In contrast, London and Paris opened lower, while Frankfurt was flat.

Also read: Global stock markets rise amid inflation hopes

The rally in Asian markets offers a glimmer of optimism following a turbulent week for global equities, demonstrating investor confidence in technology earnings and easing US inflationary pressures.