Asian stocks gain on Fed bets; Australians jump on Reuters jobs data

Author: Kevin Buckland

TOKYO (Reuters) – Asian shares rallied on Thursday, tracking a technology-led Wall Street overnight rally after an expected U.S. consumer inflation reading bolstered bets on a Federal Reserve rate cut next week.

passed 40,000 for the first time since mid-October, led by gains in chip stocks. An index of major exporters also got a boost from a weaker yen, as traders trimmed bets on a Bank of Japan rate hike next week.

The Australian dollar rose after employment data beat estimates by a wide margin, recovering from Wednesday’s weakness following a Reuters report that Beijing was considering allowing the yuan to depreciate further next year. China is Australia’s largest trading partner and is often used as a liquid proxy for the yuan.

The yuan remained above a one-week low after the central bank set a marginally stronger official peg.

The technical Nikkei jumped 1.5% as of 02:02 GMT, while the broader was up 1.2%.

South Korea added 0.7%, while Taiwan’s benchmark gained 1%.

Hong Kong advanced 0.4% and mainland blue chips were higher by 0.2%.

Overnight, the technology-focused Nasdaq rose 1.8% to close above 20,000 for the first time, while gaining 0.8%. Futures for both indexes, however, pointed to a 0.2% decline.

The U.S. consumer price index rose 0.3 percent last month, the biggest increase since April, but exactly as forecast by economists in a Reuters poll and not hot enough to dissuade Fed officials from normalizing policy, analysts said.

“The US CPI footprint has lit a fire in US equity,” said Chris Weston, head of research at Pepperstone.

“The market essentially saw one of the last remaining hurdles that could derail sentiment,” he said, “seeing the coast somewhat clearer for the glorious seasonal yield chase that will play out through the end of the year.”

Traders are now giving 97% odds on a quarter-point Fed cut on December 18.

The U.S. dollar held near a two-week high, boosted by higher Treasury yields, as data showing a widening U.S. budget deficit fueled caution about debt.

it rose to 4.2828% on Thursday, the highest since November 27th.

Main rivals the euro and franc were under pressure ahead of expected cuts of as much as half a percentage point by the European Central Bank and the Swiss National Bank later in the day.

which measures the currency against the euro, franc, yen and three other major rivals, was little changed at 106.51 after touching 106.81 on Wednesday for the first time since Nov. 27.

The euro rose 0.1% to $1.05065 after hitting a one-week low overnight.

The dollar weakened 0.1% to 0.88345 Swiss francs.

It fell 0.2% to 152.11 yen, retreating from a two-week high hit on Wednesday on a Bloomberg report that BOJ officials see “small cost” in waiting to raise rates again. Market odds on a quarter-point increase last December 19 were 27%.

The yuan added 0.2% to 7.2670 per dollar in offshore trade.

Gold rose to more than a one-month high amid promises of lower bond yields as the Fed and other major central banks ease policy. It hit $2,725.79 for the first time since Nov. 6 before retreating to $2,710.45.

hovered near a 2 1/2-week high amid the threat of more sanctions choking Russian oil output.

U.S. West Texas Intermediate crude futures last traded at $70.20 a barrel, down 9 cents from Wednesday, when it rose as high as $70.53 for the first time since Nov. 25.

futures fell 3 cents to $73.49 a barrel.