A person walks in front of an electronic stock board showing Japan's Nikkei 225 index at a securities firm Tuesday, Sept. 12, 2023, in Tokyo. Asian shares mostly declined Tuesday despite a Big Tech rally on Wall Street, as investors looked ahead to data on U.S. consumer prices set for later in the week. (AP Photo/Eugene Hoshiko)
A person walks in front of an electronic stock board showing Japan's Nikkei 225 and New York Dow indexes at a securities firm Tuesday, Sept. 12, 2023, in Tokyo. Asian shares mostly declined Tuesday despite a Big Tech rally on Wall Street, as investors looked ahead to data on U.S. consumer prices set for later in the week. (AP Photo/Eugene Hoshiko)
People walk past the New York Stock Exchange on Wednesday, June 29, 2022 in New York. (AP Photo/Julia Nikhinson)
An employee of a bank walks by the screens showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at a foreign exchange dealing room in Seoul, South Korea, Wednesday, Sept. 13, 2023. Stocks fell Wednesday in Asia after a slide for technology stocks dragged Wall Street lower ahead of a key report on U.S. inflation. (AP Photo/Lee Jin-man)
An employee of a bank walks by the screens showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at a foreign exchange dealing room in Seoul, South Korea, Wednesday, Sept. 13, 2023. Stocks fell Wednesday in Asia after a slide for technology stocks dragged Wall Street lower ahead of a key report on U.S. inflation. (AP Photo/Lee Jin-man)
The New York Stock Exchange on Wednesday, June 29, 2022 in New York. (AP Photo/Julia Nikhinson, File)
Specialist Glenn Carell, left, and trader Patrick Casey work on the floor of the New York Stock Exchange, Wednesday, Sept. 13, 2023. Stocks are churning in place on Wall Street after a highly anticipated report showed inflation accelerated across the country last month, but not by much more than expected. (AP Photo/Richard Drew)
Specialist Gregg Maloney works at his post on the floor of the New York Stock Exchange, Wednesday, Sept. 13, 2023. Stocks are churning in place on Wall Street after a highly anticipated report showed inflation accelerated across the country last month, but not by much more than expected. (AP Photo/Richard Drew)
Trader Edward McCarthy, left, and specialist Philip Finale work on the floor of the New York Stock Exchange, Wednesday, Sept. 13, 2023. Stocks are churning in place on Wall Street after a highly anticipated report showed inflation accelerated across the country last month, but not by much more than expected. (AP Photo/Richard Drew)
Trader David O'Day, left, and specialist John Parisi work on the floor of the New York Stock Exchange, Wednesday, Sept. 13, 2023. Stocks are churning in place on Wall Street after a highly anticipated report showed inflation accelerated across the country last month, but not by much more than expected. (AP Photo/Richard Drew)
Trader Gregory Rowe works on the floor of the New York Stock Exchange, Wednesday, Sept. 13, 2023. Stocks are churning in place on Wall Street after a highly anticipated report showed inflation accelerated across the country last month, but not by much more than expected. (AP Photo/Richard Drew)
Trader Leon Montana works on the floor of the New York Stock Exchange, Wednesday, Sept. 13, 2023. Stocks are churning in place on Wall Street after a highly anticipated report showed inflation accelerated across the country last month, but not by much more than expected. (AP Photo/Richard Drew)
Trader Fred DeMarco works on the floor of the New York Stock Exchange, Wednesday, Sept. 13, 2023. Stocks are churning in place on Wall Street after a highly anticipated report showed inflation accelerated across the country last month, but not by much more than expected. (AP Photo/Richard Drew)
A trader looks at his screen on the floor of the New York Stock Exchange, Wednesday, Sept. 13, 2023. Stocks are churning in place on Wall Street after a highly anticipated report showed inflation accelerated across the country last month, but not by much more than expected. (AP Photo/Richard Drew)
Specialist Gregg Maloney is reflected in a video screen on the floor of the New York Stock Exchange, Wednesday, Sept. 13, 2023. Stocks are churning in place on Wall Street after a highly anticipated report showed inflation accelerated across the country last month, but not by much more than expected. (AP Photo/Richard Drew)
Currency traders watch monitors at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Thursday, Sept. 14, 2023. Shares were mostly higher in Asia on Thursday after a highly anticipated report showed inflation accelerated across the U.S. in August, but not by much more than expected. (AP Photo/Ahn Young-joon)
A currency trader passes by the screens showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won, center, at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Thursday, Sept. 14, 2023. Shares were mostly higher in Asia on Thursday after a highly anticipated report showed inflation accelerated across the U.S. in August, but not by much more than expected. (AP Photo/Ahn Young-joon)
A currency trader watches monitors near the screens showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Thursday, Sept. 14, 2023. Shares were mostly higher in Asia on Thursday after a highly anticipated report showed inflation accelerated across the U.S. in August, but not by much more than expected. (AP Photo/Ahn Young-joon)
Currency traders work at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Thursday, Sept. 14, 2023. Shares were mostly higher in Asia on Thursday after a highly anticipated report showed inflation accelerated across the U.S. in August, but not by much more than expected. (AP Photo/Ahn Young-joon)
A screen displays the NYSE logo on the floor at the New York Stock Exchange in New York, Friday, June 2, 2023. (AP Photo/Seth Wenig, File)
A security guard stands guard at an entrance of Tokyo Sock Exchange building on July 18, 2023, in Tokyo. Asian shares advanced Friday, Sept. 15, with solid gains for Chinese markets after the central bank eased the reserve requirements for banks to encourage more lending and prop up the slowing economy. (AP Photo/Eugene Hoshiko, File)
Visitors look at an electronic stock board at Tokyo Stock Exchange on Aug. 18, 2023 in Tokyo, Japan. Asian shares advanced Friday, Sept. 15, with solid gains for Chinese markets after the central bank eased the reserve requirements for banks to encourage more lending and prop up the slowing economy. (AP Photo/Shuji Kajiyama, File)
Visitors are seen in Tokyo Stock Exchange on Aug. 18, 2023 in Tokyo. Asian shares advanced Friday, with solid gains for Chinese markets after the central bank eased the reserve requirements for banks to encourage more lending and prop up the slowing economy. (AP Photo/Shuji Kajiyama, File)
ARM Holdings CEO Rene Haas, holds the Nasdaq Opening Bell Crystal at the Nasdaq MarketSite, during his company's IPO, in New York's Times Square, Thursday, Sept. 14, 2023. (AP Photo/Richard Drew)
TOKYO (AP) — Asian shares advanced Friday, with solid gains for Chinese markets after the central bank eased the reserve requirements for banks to encourage more lending and prop up the slowing economy.
Hong Kong's Hang Seng surged 1.3% to 18,280.11 and the Shanghai Composite index was up 0.4%, at 3,138.94.
Late Thursday, the People's Bank of China said it would cut the reserve requirement for banks by 0.25 percentage points as of Friday, “In order to consolidate the foundation for economic recovery and maintain reasonable and sufficient liquidity.”
Further boosting sentiment, the government reported Friday that China’s industrial output rose 4.5% in August from a year earlier, up from 3.7% in July. That is seen as a sign the economy may be breaking out of its post-pandemic malaise.
Japan's benchmark Nikkei 225 surged 1.0% to 33,511.91. Australia's S&P/ASX 200 jumped 1.7% to 7,311.30. South Korea's Kospi added 0.6% to 2,588.38.
SoftBank Group Corp., which fully owned chip designer Arm Holdings before it debuted on Nasdaq on Thursday, rose 2.9% in Tokyo morning trading.
Arm's shares jumped 24.7% in their debut on Nasdaq. The strong welcome could be an encouraging signal for the IPO market, which has slowed since the stock market began tumbling early last year on fears about higher interest rates.
“The Arm IPO optimism and China’s further stimulus measures boosted sentiment across Asian stock markets,” said Tina Teng, markets analyst at CMC Markets APAC & Canada.
On Wall Street, the S&P 500 climbed 0.8% to 4,505.10 for its best day in two weeks. The Dow Jones Industrial Average rallied 1% to 34,907.11, and the Nasdaq composite added 0.8% to 13,926.05.
Some of the strongest action was in the bond market, where Treasury yields swung up and down several times. While the reports bolstered hopes the U.S. economy will avoid a deep recession, the strength underlying them could also add upward pressure on inflation.
One report said U.S. shoppers spent more at retailers last month than economists expected. That reflects a remarkably resilient job market, which has withstood a steep jump in interest rates. A separate report Thursday morning said fewer workers applied for unemployment benefits last week than expected, which implies the number of layoffs remains low.
A third report said prices getting paid at the wholesale level rose more last month than economists expected. That could be a discouraging signal for households if the higher-than-expected inflation gets passed on to shoppers at the consumer level.
To try to get inflation back down to its 2% target, the Federal Reserve has been increasing interest rates sharply since early last year. The hope on Wall Street is that a slowdown in inflation since last summer means the Fed is done with its rate hikes, which slow the economy and hurt investment prices.
Treasury yields initially jumped following Thursday’s reports on fears they could push the Fed to raise rates again or at least to keep rates higher for longer. But economists pointed out that much of last month’s acceleration in wholesale inflation was due to higher fuel prices, which can shift direction sharply and quickly.
Ignoring those and other particularly volatile prices, underlying inflation trends in Thursday’s report were closer to economists’ expectations.
Traders pared back expectations for the Fed to raise rates again some time this year, though they’re still betting on a roughly 40% chance of that, according to data from CME Group.
Hopes that the Fed may be done hiking rates may be overdone, warned Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office.
“The Fed is still likely to remain on hold next week, but if the economy continues to surprise to the upside, all bets are off as to what they’ll do after their final two policy meetings of the year,” he said.
In energy trading, benchmark U.S. crude rose 57 cents to $90.73 a barrel. Crude has been climbing for months as oil-producing countries try to support its price by curtailing their supplies. Brent crude, the international standard, gained 48 cents to $94.18 a barrel.
In currency trading, the U.S. dollar inched up to 147.46 Japanese yen from 147.42 yen. The euro cost $1.0642, little changed from $1.0645.
___
AP Business Writer Stan Choe contributed.
Before you make your next trade, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.
Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.
They believe these five stocks are the five best companies for investors to buy now...
See The Five Stocks Here
Need to stretch out your 401K or Roth IRA plan? Use these time-tested investing strategies to grow the monthly retirement income that your stock portfolio generates.
Get This Free Report