Dec 23 (V7N) - Asian stock markets saw positive gains on Monday, mirroring the strong performance on Wall Street, after traders reacted favorably to below-forecast US inflation data. This helped alleviate concerns about the Federal Reserve’s interest rate outlook for the upcoming year.

The rally followed the release of the personal consumption expenditures (PCE) index, the Federal Reserve's preferred inflation gauge, which showed a 2.4 percent increase in November compared to the previous year. Although it marked a slight rise from October, it came in below expectations, offering hope that inflation may be under control, potentially allowing the Fed to ease rate hikes. This data provided a sense of relief, following last week's volatile market activity triggered by the Fed's forecast suggesting less aggressive cuts to borrowing costs in 2024.

The PCE data led to a pullback in US Treasury yields, which had surged to their highest levels since May. Chicago Fed President Austan Goolsbee’s comments, affirming that inflation was moving toward the Fed’s 2% target, further bolstered investor confidence.

The US stock market closed strongly, with all three major indexes finishing over 1% higher. Asian markets followed suit, with key indices across Tokyo, Hong Kong, Shanghai, Sydney, Singapore, Seoul, Taipei, and Manila all showing gains.

The US dollar remained weaker against major currencies following the inflation data, with the yen, pound, and euro all strengthening slightly.

Investors were also buoyed by the news that US lawmakers had successfully reached a deal to avoid a government shutdown, ensuring the continuation of government operations over the Christmas period. The agreement came after extended negotiations, including significant pressure from figures like former President Donald Trump and billionaire Elon Musk.

Key Market Figures (as of 0200 GMT)

Tokyo - Nikkei 225: +1.0% at 39,075.07

Hong Kong - Hang Seng Index: +0.4% at 19,790.67

Shanghai - Composite: +0.1% at 3,372.40

Euro/Dollar: $1.0438 (up from $1.0431)

Pound/Dollar: $1.2581 (up from $1.2567)

Dollar/Yen: 156.47 yen (up from 156.45 yen)

West Texas Intermediate Crude: +0.5% at $69.78 per barrel

Brent North Sea Crude: +0.4% at $73.21 per barrel

The gains in Asian markets and the optimism surrounding the US inflation data suggest a positive outlook, though uncertainties remain over potential economic challenges and political developments in both the US and global markets.

END/BUS/RH