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Benchmarks in Australia, Japan and South Korea all notched gains. The S&P 500 closed Wednesday 1.8% higher, the benchmark’s best day since the November election, which erased its 2025 decline. The tech-heavy Nasdaq 100 climbed 2.3%.
Treasuries were little changed on Thursday after a rally in the previous session pushed 10-year yields 14 basis points lower. An index of the dollar slipped. The yen edged higher after climbing 0.9% against the greenback on Wednesday, its strongest showing since November. Australian and New Zealand bond yields fell in early trading.
The moves centered upon US core consumer price index data for December that rose less than forecast, reinvigorating bets the Fed will cut rates sooner than previously thought. Swap traders are back to fully pricing in a rate cut by July — a quick shift after Friday’s hot jobs data spurred bets officials would only be able to resume policy easing in September or October.
“We’re in a goldilocks scenarios where growth is holding up,” Suresh Tantia, a strategist for UBS Wealth Management, said on Bloomberg Television. “We do expect the earnings of tech companies in Asia to rise substantially this year, especially in the AI space.”
The gains spread across asset classes and supported some of the most speculative corners of financial markets. Bitcoin traded around $100,000 and Goldman Sachs Group Inc.’s basket of money-losing tech companies rose 3.2%. The CBOE VIX index slumped the most this year and a Bloomberg measurement of the “Magnificent Seven” megacaps rallied 3.7%.
A gauge of commodity prices hit the highest level in almost two years against a mixed geopolitical backdrop as sanctions on Russia began to hit crude flows while a cease-fire between Israel and Hamas eased concerns over intensifying conflict.
Oil extended a powerful early-year advance on mounting risks to global supplies, and as commercial crude inventories in the US posted their longest run of declines since 2021. Gold slipped after climbing in the previous two sessions.
The Australian dollar rose after data showed the unemployment rate remained low in December as the economy extended a streak of hiring gains. The Bank of Korea is expected to cut borrowing costs 25 basis points to 2.75% when it hands down a rate decision on Thursday.
Later Thursday, the European Central Bank will release its meeting minutes while US data to be released includes initial jobless claims and retail sales, providing investors with a broader picture of the health of the world’s largest economy.
The Canadian dollar edged higher after a report stated the country has drawn up a list of US goods it would hit with tariffs if President-elect Donald Trump decides to levy tariffs on Canadian goods.
Cooling Inflation
The so-called US core consumer price index — which excludes food and energy costs — increased 0.2% in December. That marked the first stepdown in the rate in six months. From a year ago, it rose 3.2%. That’s still above the Fed’s 2% target.
A handful of Federal Reserve officials said the data offered confidence that inflation would continue to ebb. “The process of disinflation remains in train. But we are still not at our 2% goal, and it will take more time until we can achieve that on a sustained basis,” New York Fed President John Williams said Wednesday.
“The market will be encouraged by the decrease in core inflation, which should alleviate some of the pressure on stock and bond markets, both of which have had a poor start to the year on inflation fears and concerns the Fed would not only stop cutting interest rates,” said Chris Zaccarelli at Northlight Asset Management.
This is the last inflation report of President Joe Biden’s tenure, an administration dogged by high prices coming out of the pandemic that surged a cumulative 20% while he was in office. Trump will be sworn in next week, and economists generally anticipate his policies — particularly on tariffs — will put upward pressure on inflation, and measures of consumers’ expectations have been rising recently as well.
“The market is relieved that potential ‘nose-bleed’ interest rates are — for now — taken off the table and the bond market will not curtail the massive run we’ve seen over the last two years in the equity markets,” said John Kerschner at Janus Henderson Investors.
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