Most Asian stocks track Wall St record as US data ease rate fears

Most Asian stocks rose Friday as another soft US inflation reading solidified expectations the Federal Reserve will hold off hiking interest rates, while a further drop in oil prices added to the upbeat mood.

The advances tracked a healthy lead from Wall Street, where the S&P 500 ended at a record and the Nasdaq saw its highest close since June after data showed the producer price index slowed sharply in July and came in below forecasts.

The reading compounded bets on the Fed standing pat at its meeting next month, following the previous day's consumer price index reading that also pointed to easing inflationary pressure and last Friday's jobs report showing 23,000 positions were lost in July.

Investors are now pricing in a less than 40 percent chance of a September rate hike, compared with 50 percent last week.

"A few weeks ago, traders were being asked to justify why the Fed should not hike again," said Stephen Innes, global strategist at Quintex Intel.

"After the latest run of data, the burden of proof has flipped. The market now wants to know what would actually force the Fed to tighten.

"We've now had a constructive triple-header of dovish US data: softer payrolls last Friday, an obliging core CPI print, and now a risk-friendly PPI release.

"The disinflation ducks are starting to line up, and with oil also backing off, the market has steadily stripped away the case for another near-term Fed hike."

However, uncertainty prevails on trading floors as inflation at more than three percent remains well above the Fed's two percent target, while the Middle East crisis could erupt at any time and send oil prices soaring.

Meanwhile, Cleveland Fed boss Beth Hammack reiterated her view that borrowing costs need to rise despite the latest run of figures.

"I love to see that those numbers are coming in lower... but I don’t have confidence that we're going to continue to see that, or that we're going to see them low enough that it's going to bring us back down to that two percent number," she said in Ohio on Thursday.

"I think we need to act now," she added.

That came after she told Yahoo Finance on Monday that "one 25-basis-point move probably doesn't do a whole lot for the economy. So it's probably some number of (movements)" but did not want to say where they should land.

For now the softer readings provided a boost to tech firms, which benefit from lower borrowing costs.

Seoul -- the poster child of the AI-stoked stock market boom -- rallied more than one percent as chipmakers SK hynix and Samsung continued to recover from last month's selloff.

There were also gains in Tokyo, where tech giants Kioxia, Advantest and Sony spiked and sector investment titan SoftBank surged four percent.

Taipei, Singapore, Jakarta and and Wellington were also up, with Manila fluctuating.

However, Hong Kong and Sydney slipped.

Crude prices extended Thursday's drop of more than two percent, with investors still hopeful of a deal to reopen the Strait of Hormuz despite few signs of movement and the US and Iran exchanging threats.

In the latest salvo, US Treasury Secretary Scott Bessent threatened Thursday to subject Tehran to economic isolation "like the world has never seen before", adding that new measures were expected next week.

Tokyo - Nikkei 225: UP 0.9 percent at 68,889.01 (break)

Hong Kong - Hang Seng Index: DOWN 0.8 percent at 25,203.64

Shanghai - Composite: DOWN 0.2 percent at 3,920.08

Euro/dollar: UP at $1.1536 from $1.1528 on Thursday

Pound/dollar: UP at $1.3492 from $1.3486

Dollar/yen: DOWN at 159.40 yen from 159.52 yen

Euro/pound: UP at 85.51 pence from 85.48 pence

West Texas Intermediate: DOWN 0.5 percent at $80.87 per barrel

Brent North Sea Crude: DOWN 0.5 percent at $86.62 per barrel