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Hong Kong's Hang Seng Leads Gains, Asia Stocks Rise After Better-Than-Expected U.S. Inflation Report

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  • Asia-Pacific markets climbed on Thursday after a better-than-expected inflation report in the U.S. sent stocks spiraling higher.
  • Consumer prices rose 8.5% in July compared to the same period a year ago, a slightly better result than the 8.7% increase that economists polled by Dow Jones were expecting.
  • Japan's market is closed for a holiday Thursday.

SINGAPORE — Asia-Pacific markets climbed on Thursday after a better-than-expected inflation report in the U.S. sent stocks spiraling higher.

Hong Kong's Hang Seng index advanced 2.4% to 20,082.43, with the Hang Seng Tech index rising 3.67%.

Mainland China markets also ticked up. The Shanghai Composite gained 1.6% to close at 3,281.67 and the Shenzhen Component climbed 2.05% to 12,474.03.

Australia's S&P/ASX 200 rose 1.12% to end the session at 7,071.

The Kospi in South Korea was 1.73% higher at 2,523.78 and the Kosdaq jumped 1.45% to 832.15.

MSCI's broadest index of Asia-Pacific shares outside of Japan increased 1.76%.

Japan's market is closed for a holiday Thursday.

Consumer prices rose 8.5% in July compared to the same period a year ago, a slightly better result than the 8.7% increase that economists polled by Dow Jones were expecting.

The Dow Jones Industrial Average leapt 535.10 points, or 1.63%, to close at 33,309.51. The S&P 500 jumped 2.13% to 4,210.24, and the Nasdaq Composite soared 2.89% to 12,854.80.

"It's understandable that markets were pleased to see better inflation headlines overnight. But while the change matters, central banks care more about the level of inflation and there's a long and uncertain path down that mountain," Brian Martin and Daniel Hynes of ANZ Research wrote in a Thursday note.

"We doubt very much that one monthly data point will be sufficient to get the Fed to drop its hawkish guard," the note said.

PBOC report

The People's Bank of China, in its monetary policy report released Wednesday, highlighted the inflation risk that lies ahead. Official data on Wednesday showed China's consumer price index hit a two-year high in July.

"The [PBOC monetary policy report] proposed three drivers for elevated inflation pivot ahead: i) the consumption recovery post Omicron wave; ii) the spillover effect from global energy price fluctuation; iii) the swift turnaround of pork cycle," according to a Citi research report.

"We see evidently a rising concern on inflation risk from the PBoC, which may be reflected in easing decisions ahead," the analysts wrote.

In company news, SoftBank Group said it would reduce its stake in Chinese tech giant Alibaba through an early physical settlement of prepaid forward contracts for around 242 million American Depository Receipts. The move would add 4.6 trillion yen ($34.6 billion) to its pre-tax gains, SoftBank estimated.

"By settling these contracts early, SBG will be able to eliminate concerns about future cash outflows, and furthermore, reduce costs associated with these prepaid forward contracts," the company said in a press release.

"These will further strengthen our defense against the severe market environment."

Separately, Apple supplier Foxconn on Wednesday posted results that beat expectations, but was cautious on the outlook. Foxconn shares rose 2.73% on Thursday.

Property developer Longfor Group's shares added 4.31% on Wednesday after the company confirmed in an announcement that it did not defer a debt payment. The stock plunged sharply in the previous session.

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 105.025 after a sharp fall overnight following the U.S. inflation report.

The Japanese yen traded at 132.55 per dollar, after strengthening sharply. The Australian dollar was higher at $0.7098.

U.S. crude futures reversed course to rise 0.32% to $92.22 per barrel and Brent crude futures added 0.34% to $97.73 per barrel.

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