Traders already had a spring in their step this week on signs that the US central bank's monetary tightening measures were kicking in, fanning speculation that this month's expected hike could be the last of an elongated cycle.
And the mood brightened further Wednesday when the US Labor Department said the consumer price index came in at 3.0 percent in June, the lowest since March 2021 and sharply down from 4.0 percent in May. The Fed's target is two percent.
On top of that, the "core" rate, which excludes the volatile food and energy components and is seen as a better sign of underlying inflation, sank to its lowest since 2021.
The readings follow last week's better-than-hoped personal consumption expenditures data -- seen as the Fed's preferred gauge -- and stoked bets that it will hike just once more this month before calling it quits.
Analysts also pointed out that, while showing signs of softness, the economy remained in rude health and the labour market was still robust, suggesting the recession many had feared earlier this year could be avoided.
"The economy is defying predictions that inflation would not fall absent significant job destruction," Lael Brainard, director of the National Economic Council and a former Fed vice chair, told the Economic Club of New York.
Also Wednesday, the Fed's "beige book" survey of the economy showed activity had improved since late May thanks to strong tourism and travel.
Wall Street cheered the latest figures Wednesday, with the Nasdaq up more than one percent as tech firms are more susceptible to borrowing costs, while European markets also surged.
Asia happily picked up the baton, with Hong Kong up more than two percent while Tokyo, Shanghai, Sydney, Seoul, Singapore and Manila were all up more than one percent. Mumbai, Bangkok and Wellington were also higher.
Paris extended its rally at the open, while London and Frankfurt were flat.
- China tech hopes -
The dollar struggled to rebound from extended losses Wednesday against its main peers, with the yen holding below 139 to the greenback, sterling hovering at a 15-month high above $1.30 and the euro at multi-month highs.
"The nature of (the) numbers suggest that whatever other Fed officials would have us believe in the context of their current hawkishness, further rate hikes beyond this month will be a big ask, and probably won't happen," said Michael Hewson at CMC Markets.
Hong Kong's tech giants were among the Hang Seng Index's best performers on hopes that China's crackdown on the sector is near an end.
That optimism was boosted by state media reports that Premier Li Qiang met representatives from industry leaders including Alibaba and TikTok's Chinese counterpart Douyin on Wednesday.
Li "listened to the opinions and suggestions" of the sector for a "healthy development" of the digital economy, broadcaster CCTV said.
Representatives of Alibaba's cloud computing arm, e-commerce champions JD.com and Pinduoduo, and social networks Douyin and Instagram-like Xiaohongshu were among those present.
"I hope many digital companies will firmly believe in the future," said Li, according to CCTV.
The imposition of hefty fines for fintech affiliates of Tencent and Alibaba last week was seen as a signal the painful crackdown had wound down.
Willer Chen, at Forsyth Barr Asia, said: "Key signal-sending from the government is still hoping that platform companies will create more jobs, maintaining international competitiveness and helping the real economy."
Traders are also keeping watch for any statements out of Beijing after officials announced a series of pledges to support the struggling property sector and indicated other growth-boosting measures would be outlined.
Expectations for more work were boosted by data showing Chinese exports plunged more than 12 percent last month while imports were also sharply down.
- Key figures around 0810 GMT -
Tokyo - Nikkei 225: UP 1.5 percent at 32,419.33 (close)
Hong Kong - Hang Seng Index: UP 2.6 percent at 19,350.62 (close)
Shanghai - Composite: UP 1.3 percent at 3,236.48 (close)
London - FTSE 100: FLAT at 7,416.61
Euro/dollar: UP at $1.1147 from $1.1138 on Wednesday
Dollar/yen: DOWN at 138.39 yen from 138.47 yen
Pound/dollar: UP at $1.3019 from $1.2992
Euro/pound: DOWN at 85.63 pence from 85.70 pence
West Texas Intermediate: UP 0.2 percent at $75.92 per barrel
Brent North Sea crude: UP 0.3 percent at $80.38 per barrel
New York - Dow: UP 0.3 percent at 34,347.43 (close)
-- Bloomberg News contributed to this story --
dan/qan
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