Asia-Pacific markets surge as Japan’s GDP growth exceeds expectations

Asia-Pacific markets surged on Thursday, driven by Japan's GDP growth surpassing expectations. Traders also considered China's retail sales numbers and positive strides on Wall Street as easing United States consumer inflation buoyed hopes that a big interest rate cut was around the corner.

Japan's Nikkei 225 up 0.75%, South Korea's KOSPI 200 0.94%, and India's BSE-100 0.98%. Other markets also showed gains, including the Shanghai SE A Share Index, which rose by 0.62%, and Pakistan's KSE-100 index, which increased by 0.95%.

However, Taiwan's TAIEX Index fell by 0.49%, and Hong Kong's Hang Seng Index dipped0.11%. Dubai's DFM General index also saw a rise of 0.69%.

In the US, consumer prices rose by 2.9% year over year, down from 3% in June, marking the lowest reading since March 2021. On a month-over-month basis, prices increased by 0.2%, according to the Bureau of Labor Statistics.

Meanwhile, Japan's GDP for the second quarter grew by 0.8% on a quarter-on-quarter basis, exceeding the 0.5% rise forecasted by economists polled by Reuters. This growth translates to an annualized increase of 3.1%, a significant rebound from the first quarter's revised 2.3% contraction.

The strong rise in consumption and a boost from tourism contributed to this economic expansion, supporting the possibility of another near-term interest rate hike.

The Bank of Japan had anticipated that a robust economic recovery would help achieve a sustainable 2% inflation target, justifying further interest rate increases after a recent hike. The latest GDP figures align with this forecast, showing a solid recovery.

However, China's industrial production slowed and consumer spending ticked up, marginally beating analyst expectations and unemployment rose in July. The uninspiring data dampened slim hopes of the start of an economic revival in Asia's biggest market.