(Bloomberg) -- Japanese stocks gained, with the Nikkei 225 Stock Average jumping 3%, as investors wagered that slower US inflation would spur the Federal Reserve to moderate its pace of rate hikes.

Tokyo Electron Ltd. was the biggest boost to the blue-chip gauge, climbing more than 8% as tech shares surged. Electronics and chemical makers were the biggest drivers of a 2.1% gain in the Topix. The yen weakened about 0.5% to 141.5 per dollar after strengthening 3.8% overnight.

“Looking at yesterday’s CPI numbers, the risk has decreased of not knowing how far interest rates will rise,” said Hiroshi Matsumoto, a senior client portfolio manager at Pictet Asset Management (Japan) Ltd. However, it’s still “too early” to expect rate cuts, he added.

The US consumer price index rose 7.7% from a year earlier, cooling by more than forecast. Rates traders downgraded the odds of another three-quarter-point rate increase by the Fed in December almost to nil. The S&P 500 Index and Nasdaq 100 soared by the most in more than two years and Asian stocks rallied broadly.

Japanese equities have outperformed global peers this year on benefits from a weak yen, easy-money policy from the Bank of Japan and strong corporate earnings. The yen touched a 32-year low of around 150 per dollar last month, boosting the profit outlook for the nation’s exporters.

“Earnings performance doesn’t looks so bad now because of the weak yen, but that will eventually wear off and it will take companies time to create an environment to improve margins,” Matsumoto said.

©2022 Bloomberg L.P.