Asian Stocks Surge as US Data Ease Rate Hike Fears

Asian stocks rose across the board on Friday as a soft US inflation reading bolstered expectations that the Federal Reserve will hold off hiking interest rates. The S&P 500 had already reached a record high, and the Nasdaq saw its highest close since June after producer price index data showed a sharp slowdown in July.

The latest data compounded bets on the Fed keeping rates steady at its meeting next month. Investors are now pricing in less than 40 percent chance of a September rate hike, down from 50 percent last week.

Stephen Innes, global strategist at Quintex Intel, said that the burden of proof has flipped, and markets now want to know what would force the Fed to tighten. He noted that the market has seen a 'constructive triple-header' of dovish US data: softer payrolls, an obliging core CPI print, and now a risk-friendly PPI release.

However, uncertainty prevails as inflation remains above 3 percent and the Middle East crisis could erupt at any time, sending oil prices soaring. Cleveland Fed boss Beth Hammack reiterated her view that borrowing costs need to rise, saying 'I think we need to act now.'