Asia-Pacific markets set for higher open, tracking tech rally and rate cut hopes

Asia-Pacific markets set for higher open, tracking tech rally and rate cut hopes

Commercial and residential buildings are illuminated at dawn in Seoul, South Korea, on Saturday, Oct. 21, 2023. South Korea has prepared a financial support program of 75.9 trillion won ($56.97 billion) for companies increasing investment in key sectors as well as small businesses struggling with the impact of high interest rates.

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Asia-Pacific markets are set for a higher open on Thursday, tracking gains made in the U.S. as traders saw a Big Tech rally and grew more confident on rate cuts from the Federal Reserve.

Chip stocks were among the biggest winners of the U.S. trading session. U.S.-listed shares of Taiwan Semiconductor Manufacturing Company added 3.5% after revenue from April to June came in ahead of Wall Street estimates.

Peer chip firm Qualcomm ticked higher by 0.8%, and Broadcom rose about 0.7%. Artificial intelligence darling Nvidia climbed 2.7%.

In Asia, investors will be watching for any spillover optimism in the region’s tech stocks, particularly in Japan, where chip related companies have lifted the Nikkei 225 to record highs.

Economic announcements from the region on Thursday will include Japan’s May machinery orders, as well as the Bank of Korea’s rate decision.

Nikkei futures pointed to a stronger open for the market, with the futures contract in Chicago at 42,525 and its counterpart in Osaka at 42,480 compared to the previous close of 41,831.99.

At these levels, the Nikkei would not only be at a fresh high, but also cross the 42,000 mark for the first time.

Futures for Australia’s S&P/ASX 200 stood at 7,873, slightly higher than its last close of 7,816.

Hong Kong Hang Seng index futures were at 17,615, higher than the HSI’s last close of 17,471.67.

Overnight in the U.S., all three major indexes rose, with both the S&P 500 and Nasdaq Composite gaining 1.02% and 1.18% respectively.

The gains also meant that the S&P broke above the 5,600 mark for the first time, marking its 37th record close in 2024. The Nasdaq saw its 27th record close this year.

The Dow Jones Industrial Average added 1.09%.

Gains were also fueled by rate cut hopes, with expectations from Dow Jones indicating that the June inflation rate would come in 3.1% year over year, lower than the 3.3% rise seen in May.

The core inflation rate, which strips out more volatile food and energy prices, is expected to rise 3.4% since June last year. In May, CPI was up 3.3% on an annual basis.

—CNBC’s Brian Evans, Samantha Subin and Jesse Pound contributed to this report.