Volkswacht Bodensee - Asian markets mostly up after US gains

While AI optimism helped buoy trading in New York, global markets diverged over questions about when the Fed may begin cutting interest rates.

Fresh personal consumption expenditures (PCE) price index figures helped shore up confidence those long-awaited cuts were likely in the offing this year.

The PCE, the US Federal Reserve's preferred inflation gauge, increased at an annual rate of 2.4 percent in January, down from 2.6 percent in December, the Department of Commerce said.

A slowing key inflation figure could move the Fed to begin cutting rates sooner rather than later, although reduction expectations have gradually been pushed to later this year due to data showing US inflation remained above the Fed's two percent target.

The closely watched "core inflation" measure, which removes volatile food and energy costs, increased by 0.4 percent from the month before, indicating an uptick in underlying inflation from December to January, according to the Thursday release.

Still, analysts said the PCE reports largely matched consensus views.

"For markets keenly focused on when the Fed will transition toward easing rates, this report will help restore confidence that it isn't 'if' the Fed will begin to cut rates in 2024, but 'when'," Quincy Krosby at LPL Financial told Bloomberg.

Stephen Innes, of SPI Asset Management, said in a note that "given the upward trajectory of stocks throughout the year, some investors perceived the absence of hotter-than-expected inflation news as a less problematic macro signal".

On Wall Street, the tech-linked Nasdaq set a new record, surpassing a 2021 high. The two other major US indices also rose.

Strong investor sentiment around artificial intelligence "underscores broader confidence in the potential for technological innovation to fuel economic growth and corporate performance", Innes said.

In Asia, factory activity in China contracted for the fifth straight month in February, official figures showed Friday, as sluggish demand in the world's second-largest economy continues to drag on growth.

The purchasing managers' index (PMI), a key barometer of factory output, was 49.1 percent last month, indicating a contraction in activity.

The country's monthly PMI has only registered expansions twice throughout the last year, most recently in September.

China's weeklong Lunar New Year period, the longest annual public holiday, occurred in February this year, also partially explaining the slowdown in activity.

Eric Zhu of Bloomberg Economics said he expected the PMI surveys to "show activity pulling back due to disruptions" from the holiday period, adding that traders will need to wait for more data to get a clearer picture of the economy.

Investors are also awaiting next week's National People's Congress gathering with hopes Beijing will offer the struggling Chinese economy more support measures.

Shanghai and Tokyo stocks were trading higher on Friday, while Hong Kong was flat.

Markets in Sydney, Taipei, Manila and Kuala Lumpur gained. Singapore, Jakarta and Wellington fell.

- Key figures around 0230 GMT -

Tokyo - Nikkei 225: UP 1.7 percent at 39,836.57

Hong Kong - Hang Seng Index: FLAT at 16,506.92

Shanghai - Composite: UP 0.2 percent at 3,020.06

Euro/dollar: UP at $1.0817 from $1.0808 on Thursday

Dollar/yen: UP at 150.34 yen from 149.93 yen

Pound/dollar: UP at $1.2630 from $1.2624

Euro/pound: UP at 85.65 pence from 85.59 pence

Brent North Sea Crude: UP 0.3 percent at $82.17 per barrel

West Texas Intermediate: UP 0.3 percent at $78.46 per barrel

New York - Dow: UP 0.1 percent at 38,996.39 (close)

London - FTSE 100: UP 0.1 percent at 7,630.02 (close)

-- Bloomberg News contributed to this story --

S.Gantenbein--VB