Asian stocks rally on softer U.S. CPI, Fed meeting awaited By

© Reuters

By Ambar Warrick– Asian stock markets rose sharply on Wednesday as softer-than-expected U.S. inflation data ramped up hopes of slowing interest rate hikes, although sentiment still remained cautious in anticipation of more signals on monetary policy from the Federal Reserve.

Technology-heavy bourses gained the most in Asia, with South Korea’s , Hong Kong’s , and the index rising between 1% and 1.4%.

Asian tech stocks were boosted by a report that the to help local chipmaking firms weather U.S. restrictions on semiconductor imports.

China’s blue-chip index rose 0.6%, while the index added 0.3%. Concerns over rising COVID-19 cases in the country weighed on local stocks, even as the government relaxed more restrictions.

Technology stocks were heavily sold off this year as rising yields saw investors discounting future earnings from the sector. But the sector is primed for a sharp recovery on the prospect of slower rate hikes.

Overnight, the also outperformed its peers on Wall Street, as data showed U.S. inflation eased more than expected in November. The reading drummed up hopes that the Federal Reserve will now slow its pace of rate hikes, thanks to easing price pressures.

The central bank is set to (bps) at the conclusion of a two-day meeting on Wednesday. But focus is squarely on after the meeting for more cues on the path of interest rates.

Markets are now pricing in the by the Fed during its first meeting for 2023. But traders were also cautious over any reiteration of the Fed’s hawkish stance, given that inflation is still trending well above the central bank’s target range.

Japan’s index added 0.8%, even as data showed worsened in the fourth quarter. But the outlook for the remained upbeat in the wake of a post-COVID boom.

Still, a separate reading showed that a decline in the country’s nearly doubled in October from the prior month, signaling more near-term weakness in the economy.

Indian stocks were somewhat muted in anticipation of due later in the day. The and indexes rose 0.4% and 0.3%, respectively.

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