Most Asian stocks advanced on Friday, mirroring Wall Street's record close as another soft US inflation reading solidified expectations that the Federal Reserve will hold off hiking interest rates. The positive sentiment was further bolstered by a drop in oil prices. The S&P 500 ended at a record high and the Nasdaq saw its highest close since June after data showed the producer price index slowed sharply in July, coming in below forecasts. This compounded bets on the Fed standing pat at its meeting next month, following previous data indicating easing inflationary pressure.
The softer inflation readings provided a boost to tech firms, which benefit from lower borrowing costs. Seoul's market rallied more than one percent as chipmakers SK hynix and Samsung continued to recover from last month's selloff. There were also gains in Tokyo, where tech giants Kioxia, Advantest, and Sony spiked, and sector investment titan SoftBank surged four percent. Taipei, Singapore, Jakarta, and Wellington also saw gains, while Manila fluctuated.
Despite the positive market sentiment, uncertainty remains. Inflation is still well above the Fed's two percent target, and the Middle East crisis could potentially send oil prices soaring. Cleveland Fed boss Beth Hammack reiterated her view that borrowing costs need to rise despite the latest run of figures, expressing doubt about sustained low inflation.
