Hong Kong stocks close higher on Friday. The Hang Seng Index rose 0.8%, while the Hang Seng Tech Index climbed 1.1%.

XPeng up 8%; Horizon Robotics up 7%; Li Auto, Wuxi Bio up 4%; Nio up 2%; Tencent, Alibaba, Xiaomi, Kuaishou, Meituan up 1%.

Cooling US inflation is expected to ease jitters about a potential global bubble in artificial intelligence, which has been fuelled by massive spending in data centres and lofty valuations of tech titans from Nvidia to Microsoft. Global stocks have been oscillating wildly this week as investors navigate through a complicated macro environment after a strong labour market report earlier in the week tamped down bets on immediate monetary easing and spurred sell-offs in equities.

“Lower-than-expected inflation has left more room for the US Federal Reserve to cut interest rates,” said Yan Xiang, an analyst at Founder Securities. “The next window for a reduction may start in March. The easing narrative is positive for stocks and we might see some rotation from technology stocks with high valuations and concentrations.”

Core US inflation accelerated at 2.6 per cent in November, the slowest pace since early 2021, according to official data released on Thursday night. Overall consumer prices rose 2.7 per cent year on year, compared with the consensus estimate of a 3.1 per cent increase.

The Japanese yen weakened against major currencies after the Bank of Japan raised the benchmark interest rate by 25 basis points as expected. The depreciation suggested that the hike had already been fully priced in and helped assure investors that global financial markets would not be unsettled.