Asian equities inched higher on Friday after as investors relieved after softer reading of US inflation, expecting another interest rate cut as early as next month. Optimism was further supported by strong earnings from US chipmaker Micron Technology, which eased fears that the rally in technology stocks may be overstretched.Hong Kong’s HSI is trading at 25,645, up 147 points or 0.58%. Nikkei reached 49,567, adding 566 points or 1.16%. Shenzhen and Shanghai also added 0.75% and 0.42%, respectively. South Korea’s Kospi also inched 33 points to 4,028 at 11:03 AM IST. Data released overnight showed US inflation slowed last month to its lowest level since July and came in well below market expectations. The figures helped steady investor sentiment after concerns grew in recent weeks over the outlook for monetary easing following the Federal Reserve’s policy decision last week. While traders had earlier scaled back expectations of a fourth straight rate cut in January, the latest data revived hopes of further easing. According to Bloomberg News, markets are now pricing in a 20 percent chance of a rate cut next month, with two reductions expected by the end of 2026. However, analysts cautioned that the inflation figures may not present a clear picture. The data was collected during the longest-ever US government shutdown, which ended in mid-November, potentially skewing the results. Economists at Bank of America said “we recommend taking (the) report with a large grain of salt”, pointing to “shutdown-related distortions”. Even so, Wall Street reacted positively, with all three major indices closing higher. US stocks have been under pressure recently as investors question when returns will materialise from the vast amounts of capital poured into artificial intelligence, fuelling talk of a possible bubble in the technology sector. Those concerns were partly soothed on Thursday after Micron Technology reported a sharp surge in profits, with quarterly earnings nearly tripling to $5.2 billion. The company said it was benefiting from the AI boom and also delivered a positive outlook for the current quarter.Tokyo added over 1% as attention turned to the Bank of Japan’s policy decision later in the day. The central bank is widely expected to raise interest rates to their highest level in 30 years. The anticipated move follows data showing inflation in Japan remained steady at three percent in November. Japanese government bond yields have climbed in recent weeks amid concerns over budget discipline under Prime Minister Sanae Takaichi, who took office in October, while the yen has weakened. Takaichi has pledged to prioritise the fight against inflation. The yen showed little movement against the dollar on Friday, though analysts expect the currency to strengthen as US rates fall and Japanese rates rise.
