Asia report: Markets rise as Bank of Korea holds key rate

(Sharecast News) - Asia-Pacific markets advanced Thursday, buoyed by Wall Street's rally following softer-than-expected US core inflation data and robust corporate earnings.

South Korea's central bank added an unexpected twist by keeping its policy rate steady, defying expectations of a 25 basis-point cut.

"Investors in Asia took a breather after Wednesday's US and UK inflation figures, offering a reprieve from the stranglehold of soaring global bond yields," said SPI Asset Management managing partner Stephen Innes.

"While it's premature to declare a significant market shift, the battered realms of fixed income and emerging markets were ripe for a rally on any snippet of good news.

"The spark? Stellar US bank earnings and, subtly on the sidelines, a ceasefire between Israel and Hamas, both buoying market spirits."

However, Innes noted that the primary market mover remained the inflation update from the US, which triggered a swift drop in bond yields and a surge in stocks.

"With this information, Thursday should be a brighter day for trading across Asia.

"Enjoy it while it lasts, as we all know how quickly the tides can turn in these unpredictable financial seas."

Most markets manage gains after overnight rally on Wall Street

In Japan, the Nikkei 225 climbed 0.33% to close at 38,572.60, supported by strong gains in Hino Motors, Furukawa Electric, and Dainippon Screen Manufacturing.

However, the broader Topix dipped slightly by 0.09% to 2,688.31, reflecting mixed performance among listed companies.

China's Shanghai Composite rose 0.28% to 3,236.03, with Pengxin International Mining and Jinan High Tech Development each surging over 10%.

The Shenzhen Component added 0.41%, closing at 10,101.10.

Hong Kong's Hang Seng Index jumped 1.23% to 19,522.89, driven by strength in China Hongqiao Group, Geely Automobile, and Zhongsheng Group Holdings.

South Korea's Kospi 100 gained 1.44% to 2,531.74 after the Bank of Korea surprised by holding its benchmark rate steady, despite expectations of a cut.

Hanwha Solutions led the index, surging 15.43%, while Amorepacific and SK Hynix posted notable gains.

Australia's S&P/ASX 200 advanced 1.38% to 8,327.00, led by Neuren Pharmaceuticals, which soared 11.54%, and strong performances from ZIP Co and Corporate Travel Management.

Across the Tasman Sea, New Zealand's S&P/NZX 50 rose 0.44% to 13,000.67, with Vista Group International, Port of Tauranga, and Stride Property among the top performers.

In currency markets, the dollar was last down 0.48% on the yen, trading at JPY 155.72, while it gained 0.21% against the Aussie to AUD 1.6093, and advanced 0.23% on the Kiwi, changing hands at NZD 1.7849.

Oil prices showed little movement, with Brent crude futures last down 0.11% on ICE to $81.94 per barrel, and the NYMEX quote for West Texas Intermediate edging down 0.06% to $79.99.

Bank of Korea unexpectedly holds interest rates

In economic news, South Korea's central bank unexpectedly kept its benchmark interest rate steady at 3% during its policy review on Thursday, diverging from market expectations.

Only seven out of 34 economists polled by Reuters anticipated such a decision, with most predicting a 25-basis-point cut.

The decision came as the Bank of Korea evaluated the effects of last year's consecutive rate reductions while also seeking to support the won, which recently fell to a 15-year low against the greenback.

In Australia, labour market data presented a mixed picture, adding uncertainty to expectations of an interest rate cut next month.

The country's unemployment rate edged up to 4% in December, even as 56,300 new jobs were created, according to the Australian Bureau of Statistics.

That rise in employment was driven largely by part-time roles, while the participation rate climbed to a robust 67.1%.

Elsewhere, Japan's producer price index rose 3.8% year-on-year in December, aligning with economists' forecasts.

The increase was driven by higher prices in electricity, gas, and water, as well as agricultural and forestry products.

Reporting by Josh White for Sharecast.com.