South Korea KOSPI rose 4.4 percent and Japan Nikkei gained 2.9 percent on Tuesday, as Asian markets followed Wall Street best day since April. The pan European STOXX 600 climbed 0.5 percent, coming within 1 percent of its record, and the rally that started in New York on Monday has now circled the globe.
Why it matters
The trigger was Monday in America. The S and P 500 jumped 2.35 percent to 7,549.94, the Nasdaq gained 2.74 percent, and the Dow added 1,104 points, in the best day for stocks since April. The VIX collapsed more than 22 percent, and the fear that drove last week selling gave way to bargain hunting on a large scale.
The Asian rally has its own drivers. Korea and Japan are the two markets most exposed to the chip cycle, and the same Nvidia probe that knocked the American chipmaker lower on Monday has not stopped the broader technology rally in Asia. The region makes the hardware the AI boom runs on, and a bounce in American technology is a bounce in Asian factories, from the chip plants of Korea to the electronics makers of Japan.
What happens next
The test is the same everywhere. Tuesday brings the October consumer price report at 8:30 a.m. Eastern, and economists expect a 0.3 percent monthly rise. A hot reading would strengthen the case for a December rate hike and could send stocks lower again, while a cool one would let the rally run. Asia has already voted with its buying. America votes at 8:30. A hot reading would strengthen the case for a December rate hike and could send stocks lower again, while a cool one would let the rally run, and the whole region is watching the same number.
What happens next will be decided by that number, and by whether the rally is a turn or a pause. The Nasdaq is still in correction territory, the Federal Reserve meets on December 8 and 9, and the inflation data will decide the December call. For now, the map is green from Seoul to Frankfurt, and the market is enjoying it while it lasts.
