SYDNEY, NSW, 2000 - Stocks in Asia, with the exception of Japan, rallied on Thursday following the release of July CPI data in the U.S. overnight which saw the annualised inflation rate cap out at 8.5 percent, the same as the previous month.

Sentiment followed that the Federal Reserve hereon may not be as aggressive in raising rates.

"Rising real yields, due to the Fed's commitment to fighting inflation, have been an enormous problem for valuations in 2022, so any dovishness is seen as positive by the stock market, particularly for the highest valued companies," Oliver Blackbourn, multi-asset portfolio manager at Janus Henderson Investors told Reuters Thursday.

"However, the potentially more dovish outlook undermined a key support for the U.S. dollar," He said.

China's Shanghai Composite gained 51.65 points or 1.60 percent to 3,281.67.

The Australian All Ordinaries rose 86.70 points or 1.20 percent to 7,325.40.

In New Zealand, the S&P/NZX 50 edged up 7.92 points or 0.07 percent to 11,760.01.

The Kospi Composite advanced 42.90 points or 1.73 percent to 2,523.78.

In Hong Kong, the Hang Seng surged 471.59 points or 2.40 percent to 20,082.43.

Going against the trend, in Tokyo the Nikkei 225 shed 180.63 points or 0.65 percent to 7,325.40.

The U.S. dollar, which was bit hard overnight by the CPI data lost more ground during the Asian trading zone on Thursday.

The euro cruised higher to 1.0322 by the Sydney close. The British pound edged up to 1.2219. The Japanese yen consolidated sharp gains overnight to trade at 132.51. The Swiss franc was in demand at 0.9407.

The Canadian dollar traded strongly at 1.2770. The Australian dollar was robust at 0.7092. The New Zealand dollar surged to 0.6420.

Overnight on Wall Street, the Nasdaq Composite accelerated 360.88 points or 2.89 percent to 12,854.60.

The Dow Jones industrials surged 535.10 points or 1.63 percent to 33,309.51.

The Standard and Poor's 500 gained 87.77 points or 2.13 percent to 4,210.24.