Asian stocks surge as Nikkei tops 42,000 as Wall Street sets new record

A currency trader looks at monitors near the screen displaying the Korea Composite Stock Price Index (KOSPI) in the currency trading room of KEB Hana Bank headquarters in Seoul, South Korea, Thursday, July 11, 2024.Ahn Young-joon/APCurrency traders work at the screen showing the Korea Composite Stock Price Index (KOSPI) and the exchange rate between the U.S. dollar and the South Korean won on the left in the currency exchange room of KEB Hana Bank headquarters in Seoul, South Korea, Thursday, July 11, 2024.Ahn Young-joon/APCurrency traders work at the screen showing the Korea Composite Stock Price Index (KOSPI) at the top left and the exchange rate between the U.S. dollar and the South Korean won at the top center in the currency trading room at KEB Hana Bank headquarters in Seoul, South Korea, Thursday, July 11, 2024.Ahn Young-joon/APThe New York Stock Exchange, left, is seen on Wednesday, July 10, 2024, in New York. Stocks opened higher in Europe after most markets in Asia fell, although the Nikkei 225 index in Tokyo closed at a new record highPeter Morgan/APA person walks past an electronic stock exchange board showing Japan’s Nikkei index at a stock exchange in Tokyo on Wednesday, July 10, 2024.Eugene Hoshiko/AP

Asian shares rose on Thursday after a crushing rally on Wall Street, with Japan’s Nikkei 225 index breaking above 42,000 for the first time.

Futures for the Dow Jones Industrial Average and the S&P 500 fell 0.1%.

The Nikkei 225 rose 0.9% to close at 42,224.02, surpassing its all-time high again after closing at record highs on Tuesday and Wednesday.

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There was heavy buying in a wide range of stocks, with electronics makers leading the gains. Sony Group Corp. rose 3.6% and Disco Corp., which makes precision tools, rose 3.4%. Electrical components maker Murata Manufacturing Corp. rose 2.8%.

Elsewhere in Asia, Hong Kong’s Hang Seng rose 2.1% to 17,831.40 and the Shanghai Composite index rose 1.1% to 2,970.39.

In Seoul, the Kospi rose 0.8% to 2,891.35.

Australia’s S&P/ASX 200 rose 0.9% to 7,889.60. Taiwan’s Taiex rose 1.6%, while Taiwan Semiconductor Manufacturing Corp. rose 3.4%.

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U.S. shares of TSMC rose 3.5% on Wednesday after the company said revenue rose nearly 33% in June from a year earlier. The company makes chips for Nvidia and others that have fueled the corporate rush to artificial intelligence technology.

The promise of big profits in the AI ​​future has driven Nvidia in particular to breathtaking heights over the past year, and Nvidia surged another 2.7% on Wednesday to take its year-to-date gain to 172.5%. It was once again the strongest single force pushing the S&P 500 higher as a Wall Street rally extended into a seventh day, with big tech companies leading the way.

The US stock market hit new record highs on Wednesday, led by big technology companies whose shares soared on the hype surrounding artificial intelligence.

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Hopes for rate cuts also pushed markets higher.

The S&P 500 rose 1% to break above 5,600 for the first time, closing at 5,633.91.

The Nasdaq Composite rose 1.2% to 18,647.45 and the Dow Jones Industrial Average rose 1.1% to 39,721.36.

Advanced Micro Devices was another major driver of the stock market jump. The company rose 3.9% after announcing a $665 million deal to acquire Silo AI, a European AI lab.

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Markets have broken records despite the slowing US economy and increasing pressure on lower-income households.

The hope that inflation will decline enough for the Federal Reserve to implement the desired rate cuts later this year is also fueling buying enthusiasm.

Fed Chairman Jerome Powell returned to Capitol Hill to testify on interest rates, where he reiterated many of his comments from the day before. He said he was “not giving any signals” about when rate cuts might come, but he pointed to the downsides of being late.

“More good data would boost our confidence” and pave the way for a cut, Powell said.

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Much of Wall Street expects the Fed to begin cutting its key rate in September, but traders have a long history of jumping the gun. Powell acknowledged a recent improvement in inflation but reiterated that the Fed is not confident inflation is moving toward its 2% target on a sustained basis.

Later on Thursday, the U.S. government will release its latest monthly update on inflation. Economists expect it to show that American consumers paid 3.1 percent more for food, airfare and everything else in June than a year earlier. That would be slightly slower than the 3.3 percent inflation rate in May.

“With the Federal Reserve … looking to see ‘more good data,’ US inflation will play a key role in validating whether markets are getting ahead of themselves by cutting rates as early as September this year,” IG’s Yeap Jun Rong said in a commentary.

Later this week also marks the unofficial start of the latest earnings reporting season. Delta Air Lines, JPMorgan Chase and others will report how much profit they made during the April-June spring, and hopes on Wall Street are that S&P 500 companies will deliver their strongest growth in more than two years.

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In other trading, benchmark U.S. crude rose 60 cents to $82.70 a barrel in electronic trading on the New York Mercantile Exchange.

Brent crude, the international standard, rose 63 cents to $85.71 a barrel.

The US dollar fell to 161.75 Japanese yen from 161.66 yen. The euro rose to 1.0837 dollars from 1.0832.

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