Asian equities gain as US inflation data is appreciated

Asian markets increased on Thursday as expectations for a Federal Reserve interest rate decrease increased due to more indications of declining U.S. inflation. A slew of encouraging regional economic data also helped to boost investor optimism.

The region's top performers were the Chinese and Japanese markets, as independent data prints revealed that China's retail expenditure increased in July and Japan's GDP expanded more than anticipated in the second quarter.

Wall Street, where U.S. stock indexes touched a two-week high as consumer price index inflation data read cooler than expected, provided a strong lead-in for regional markets. As the Fed's growing optimism that it would lower rates in September was bolstered by the weaker inflation statistics, U.S. stock index futures also saw a modest increase in Asian trading.

Japan's economy expanded faster than anticipated in the second quarter, according to GDP figures, helped by a rise in private spending. This recovery coincided with the nationwide implementation of the massive salary increases that Japanese labour unions had obtained earlier this year.

The improvement in the GDP number signalled a better future for the Japanese economy, particularly following a sharp decline in the first quarter. It was also related to the Bank of Japan's prediction that rising salaries will spur spending in the upcoming months, so bolstering domestically exposed equities and helping local economy.

However, the BOJ has greater leeway to raise interest rates further in light of the robust Japanese economy, particularly if inflation rises as well. A pattern like this may restrict total gains in Japanese markets.

The Shanghai Composite and Shanghai Shenzhen CSI 300 indices in China increased by more than 1% apiece after statistics revealed that the nation's retail sales increased in July faster than anticipated.

Investors mostly ignored lower-than-expected prints on industrial output and fixed asset investment due to the good retail sales data, while China's jobless rate unexpectedly increased to 4.2%.

Consumers in China have been drawing closer to their wallets as a result of the country's deteriorating economic circumstances, which has led to a significant decrease in spending.

The e-commerce giants JD.com and Alibaba, which are widely seen as bellwethers for consumer spending, are scheduled to release their quarterly profits later on Thursday, putting sentiment towards China to the test once again.

Key Focus today will be on the US retail sales data due at 13:30 GMT for further cues on the US economy.

(Sources: investing.com, reuters.com)