Asian stocks rise as tech tracks Nvidia rally; Japan surges on soft inflation

Most Asian stocks rose on Thursday with technology shares tracking an overnight rally in market darling Nvidia, while Japanese markets soared as a soft reading on producer inflation undermined hawkish signals from the Bank of Japan.

Regional technology stocks rallied after their U.S. peers as NVIDIA Corporation (NASDAQ:NVDA) CEO Jensen Huang talked up strong artificial intelligence demand. Gains were directed largely towards chipmakers.

But U.S. stock index futures were flat in Asian trade, as a stronger-than-expected reading on consumer inflation provided a more sobering outlook on interest rate cuts. Markets were seen positioning for a 25 basis point rate cut by the Federal Reserve next week.

Sectors outside technology also clocked middling gains on Wednesday.

Japan outperforms as soft PPI undermines hawkish BOJ speak
Japan’s Nikkei 225 and TOPIX indexes were by far the best performers in Asia on Thursday, rising between 2% and 3%.

Gains in Japanese stocks came as producer price index inflation data read softer than expected for August.

The reading somewhat undermined recent comments from BOJ officials that interest rates will need to rise further, especially given that any further rate hikes by the BOJ are largely contingent on inflation moving higher.

The BOJ is set to meet next week, with analysts uncertain over whether the central bank will hike interest rates again. But softer inflation gives the central bank less immediate impetus to raise rates.

BOJ board member Naoki Tamura said on Thursday that the bank needed to raise interest rates to at least 1% to avoid inflationary risks.

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Asian tech rallies, chipmakers lead on Nvidia boost
A rally in tech stocks also supported Japanese markets, while tech-heavy bourses in Asia logged relatively stronger gains.

South Korea’s KOSPI rose 1.2%, while a 4.7% rally in Taiwan’s TSMC (TW:2330) (NYSE:TSM) boosted the Taiwan Weighted index.

Tech- particularly chipmakers- rose tracking an over 8% overnight rally in Nvidia, after comments from its CEO furthered the notion that AI demand will help support tech valuations even as broader economic conditions deteriorate.

Nvidia suppliers including SK Hynix Inc (KS:000660) and Advantest Corp. (TYO:6857) rallied 5.4% and 7%, respectively.

Samsung Electronics Co Ltd (KS:005930) rose 1% after a Reuters report said the firm was planning global job cuts of up to 30% of roles in some divisions.

Beyond tech, gains in Asian markets were much more subdued. Australia’s ASX 200 added 0.7%, while futures for India’s Nifty 50 index pointed to a middling open after the index retreated on Wednesday.

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes lagged, as did Hong Kong’s Hang Seng, with all three moving in a flat-to-low range. Sentiment towards China was battered by reports of U.S. lawmakers preparing more trade restrictions on the