Affected by the slowdown of core inflation in the United States, Asian stock markets rose on Thursday (January 16), maintaining market expectations that the Federal Reserve may cut interest rates this year. The Japanese yen rose due to market expectations of the Bank of Japan raising interest rates.

Major stock indices in Australia, Hong Kong, and China all rose, driving Asian stock market indices to rise for the third consecutive day. The S&P 500 index rose 1.8% on Wednesday, marking its best single day performance since last November's election and wiping out the decline since 2025.

The data released by the US Department of Labor on Wednesday showed that the US Core Consumer Price Index (excluding food and energy costs) rose by 0.2% in December. This is the first time in six months that the growth rate has slowed down, with a year-on-year increase of 3.2%. This increase is still higher than the Federal Reserve's target of 2%.

Some Federal Reserve officials have stated that the data has boosted their confidence that inflation will continue to ease. The process of de inflation is still ongoing, but we have not yet reached our 2% target, and it will take more time to sustain that goal, "said John Williams, President of the New York Federal Reserve, on Wednesday

According to the US inflation report, swap traders have fully repriced their expectations of a possible interest rate cut in July, restoring their previously shattered bets due to stronger than expected December employment data. But as the Federal Reserve and the Bank of Japan are about to make policy decisions, and President elect Trump takes office, the market's interest in risk will be tested in the coming days.

We are currently in a prime time scenario where economic growth is still ongoing, "said Suresh Tantia, a strategist at UBS Wealth Management, on Bloomberg TV. He also stated, "We expect significant revenue growth for Asian technology companies, especially in the field of artificial intelligence, this year

In the foreign exchange market, the Japanese yen rose due to reports that Bank of Japan officials believe there is a high chance of interest rate hikes next week if Trump's presidency does not trigger too many negative surprises. The South Korean won rose as the Bank of Korea unexpectedly kept interest rates unchanged. The US treasury bond bonds and the US dollar index tended to stabilize.

Affected by reports that Bank of Japan officials expect to raise interest rates at the end of the meeting on January 24th, the yen has risen by up to 0.8%. Unless Trump's inauguration as president triggers market volatility or changes global economic expectations, the possibility of the Bank of Japan raising interest rates is high.

Charu Chanana, Chief Investment Strategist at Saxo Markets, said, "The yen rose today because the Bank of Japan hinted at a possible rate hike in January. However, the Bank of Japan usually creates surprise with dovish rhetoric, and if the rate hike is accompanied by dovish rhetoric, the yen's gains may be short-lived

Scott Bessent, nominated by Trump as Treasury Secretary, will state in a Senate committee that maintaining the US dollar as a global reserve currency is crucial for the health and future of the US economy.

In the commodity market, oil continued its strong rise at the beginning of the year due to increased global supply risks, and US commercial crude oil inventories continued to decline, marking the longest decline since 2021. The price of gold has not changed much.

In Canada, reports indicate that if President Trump were to impose tariffs on Canadian goods after his election, Canada has prepared a list of potential tariffs on American products.

Later on Thursday, the European Central Bank will release meeting minutes and the United States will release initial jobless claims and retail sales data, providing investors with a broader perspective on the health of the world's largest economy.