Japan’s Nikkei 225 surged to a fresh high on Thursday, crossing the 42,000 mark for the first time. Other Asia-Pacific markets rose on the back of a U.S. Big Tech rally and greater confidence on Federal Reserve rate cuts.

The Nikkei popped 1.37% at the open, while the broad-based Topix was up 1.17%, also reaching new highs.

Chip stocks were among the biggest winners of the U.S. trading session. U.S.-listed shares of Taiwan Semiconductor Manufacturing Company added 3.5% after revenue from April to June came in ahead of Wall Street estimates.

Peer chip firm Qualcomm ticked higher by 0.8%, and Broadcom rose about 0.7%. Artificial intelligence darling Nvidia climbed 2.7%.

In Asia, investors will be watching for any spillover optimism in the region’s tech stocks, particularly in Japan, where chip related companies have lifted the Nikkei 225 to record highs.

Economic announcements from the region on Thursday will include Japan’s May machinery orders, as well as the Bank of Korea’s rate decision.

South Korea’s Kospi was 0.96% higher ahead of the BOK decision, while the Kosdaq was 0.22% up.

Australia’s S&P/ASX 200 rose 0.85%.

Hong Kong Hang Seng index futures were at 17,615, higher than the HSI’s last close of 17,471.67.

Overnight in the U.S., all three major indexes rose, with both the S&P 500 and Nasdaq Composite gaining 1.02% and 1.18% respectively.

The gains also meant that the S&P broke above the 5,600 mark for the first time, marking its 37th record close in 2024. The Nasdaq saw its 27th record close this year.

The Dow Jones Industrial Average added 1.09%.

Gains were also fueled by rate cut hopes, with expectations from Dow Jones indicating that the June inflation rate would come in 3.1% year over year, lower than the 3.3% rise seen in May.

The core inflation rate, which strips out more volatile food and energy prices, is expected to rise 3.4% since June last year. In May, CPI was up 3.3% on an annual basis.

—CNBC’s Brian Evans, Samantha Subin and Jesse Pound contributed to this report.

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