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Asian Markets rise with Tokyo inflation - Nvidia drag neutralised

Stock markets in the Asia-Pacific region were trading higher to finish the week after inflation data out of Japan signalled the Bank of Japan (BOJ) is progressing towards its inflation goal. Losses at Nvidia dragged down the tech-heavy indices on the Nasdaq, but a strong performance by other US stocks kept the major stock indices in New York afloat on Thursday.

Date
Auteur
Shane Strowmatt, LGT
Temps de lecture
5 minutes

Japan economy
© Shutterstock

The Tokyo Core Consumer Price Index (CPI), excluding fresh food, rose 2.4% in August from a year earlier, up from 2.2% in July. A separate CPI excluding both fresh food and fuel increased 1.6% in August, compared to 1.5% in July. The BOJ was the last central bank to pull interest rates out of negative territory in March. The central bank plans more rate increases if it can keep inflation around 2% sustainably. Additionally on Friday, Japan's Economy Ministry reported a 2.8% rise in industrial output in July from the previous month, leading to an upgraded assessment of the industrial sector. In Tokyo, the Nikkei 225 was trading 0.5% higher late in Friday’s session.

Elsewhere in the Asia-Pacific region, stock markets were trading in positive territory with Hong Kong's Hang Seng Index leading gains, trading up 2.3%. The mainland CSI 300 was 2.2% higher. In South Korea, the Kospi gained 0.8% and Australia’s S&P/ASX 200 was 0.4% higher.

US economic growth revised upward

The US economy grew at an annual rate of 3% in the second quarter of 2024, up from an initial estimate of 2.8% and significantly higher than the 1.4% growth rate in the first quarter of 2024. This growth was driven by a 2.9% increase in consumer spending and a robust 7.5% rise in business investment, particularly a 10.8% jump in equipment investment. Despite high interest rates, economic growth continues to surprise to the upside, even as high prices concern voters ahead of the November presidential election.

Nvidia drags down US equity markets

In New York, the robust GDP growth helped brighten the economic backdrop. Stock markets were able to avoid a total collapse after chipmaker Nvidia’s second-quarter revenue reported a day earlier fell short of lofty investor expectations. Nvidia shares dropped 6.4%, dragging down the Nasdaq indices with it. The Nasdaq-Composite lost about 0.2% on Thursday. The S&P 500 ended the session flat, while the Dow Jones Industrial gained 0.6%.

German inflation falls below ECB target

The initial inflation rate reading in Germany for August came in at 1.9% when compared with the same period a year earlier. That’s a clearly slower rate than July’s 2.3% year-on-year inflation. Core inflation, which excludes food and energy prices, was 2.8%. The slowing inflation in Germany, the euro area’s largest economy, provides an indication into where euro-area consumer prices are headed. The eurozone CPI is due today. Falling inflation strengthens the argument for another rate cut at the European Central Bank’s next monetary policy meeting in two weeks. Germany’s DAX gained 0.7% and the Euro Stoxx 50 shot up 1% on Thursday.

Euro-area economic sentiment ticks up

In August, the European Commission’s Economic Sentiment Indicator (ESI) increased to 96.9 points in the EU and 96.6 in the euro area, up 0.4 and 0.6 points from July, respectively. The ESI gains were driven by improved confidence in industry, services, and retail trade, although consumer confidence remained stable.

Corporate and macroeconomic calendars

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: French Consumer Price Index and gross domestic product, German unemployment, euro-area consumer prices, euro-area unemployment, Italy Consumer Price Index, Canadian gross domestic product, US personal consumption expenditures, University of Michigan Consumer Sentiment Index.

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
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