US equities logged their biggest one-day climb in two years
Wall Street stocks staged spectacular rally in the aftermath of a milder CPI print on Thursday, logging their biggest one-day climb in two years. The inflation for October reflected a 7.7% increase over last year and 0.4% increase over the prior month versus 7.9% and 0.5% expected. Excluding volatile food and energy costs, core CPI increased 0.3% for the month, also less than expected. As such, the Dow Jones jumped 3.7%, the S&P 500 rallied 5.54% and the Nasdaq Composite surged 7.35%, its best since March 2020.
Following suit, Asian equities jumped on Friday, with China and Hong Kong leading a surge in the region. Investors continue to digest signs of easing US inflation, while Chinese policies to support the property sector and China’s withdrawal of some COVID-related curbs added to upbeat sentiment in the markets. Hong Kong’s Hang Seng index surged by 7.66%, the Nikkei 225 in Tokyo rose 2.98% while the Kospi in South Korea rose 3.37%.
In Europe, stocks opened higher on Friday as global markets remain buoyant after softer-than-expected US CPI signaled that inflation may have peaked. Investors are now hoping the data could encourage the Federal Reserve to ease its aggressive monetary policy tightening. US stock index futures retain positive tone in early pre-market deals, suggesting another rally could take place ahead of the weekend.
Meanwhile, the dollar stays pressured after yesterday’s plunge in reaction to a weak inflation report. The USD index extended losses to late-August lows around 107.65 and was last seen clinging to the lower end of the extended trading range. As Risk-on flows continue to dominate global markets, the safe-haven greenback is likely to stay on the defensive in the near term, with collapsing Treasury yields adding to the bearish pressure surrounding the US currency.