Asian Markets Rally as Japan’s Economy Shows Robust Growth
Asian shares were mostly higher on Tuesday, buoyed by positive economic data from Japan and a favorable U.S. inflation update. Japan’s Nikkei 225 led the gains, jumping 1.0% in morning trading following the release of encouraging economic growth figures.
Japan’s economy expanded at an annual rate of 3.1% in the April-June period, marking a significant rebound from the contraction experienced in the previous quarter. The growth was driven by strong domestic demand, which increased 3.5% from the previous quarter, fueled by healthy household consumption and robust private and government investments. Exports also showed impressive growth, rising by 5.9%.
While the economic news was positive, attention in Japan is now shifting to the political sector. The ruling Liberal Democratic Party is set to select a new leader following Prime Minister Fumio Kishida’s announcement that he will not seek re-election. Despite the leadership change, analysts expect continuity in Japan’s pro-U.S. and pro-business policies.
Elsewhere in Asia, Australia’s S&P/ASX 200 rose 0.3%, Hong Kong’s Hang Seng added 0.5%, and the Shanghai Composite surged 1.0%. Trading was closed in South Korea for Liberation Day.
The positive sentiment in Asian markets followed a strong performance on Wall Street. The S&P 500 rose 0.4%, approaching its all-time high, while the Dow Jones Industrial Average gained 242 points, pushing above the 40,000 level. The Nasdaq composite edged up less than 0.1%.
U.S. inflation data released on Monday showed consumer prices were 2.9% higher last month compared to a year earlier, contributing to steady Treasury yields. This has fueled expectations that the Federal Reserve may cut its main interest rate in September. The two-year Treasury yield, which closely tracks expectations for Fed action, edged up to 3.95%.
In energy markets, U.S. crude added 28 cents to $77.26 a barrel, while Brent crude gained 26 cents to $80.02 a barrel. Currency markets saw the U.S. dollar rise to 147.46 Japanese yen, while the euro inched down to $1.1011.
(AP Business Writer Stan Choe contributed to this report.)
