Asian Stock Market Today: Asian equities advanced on Thursday after US inflation figures came in broadly in line with expectations, reducing market expectations of another near-term Federal Reserve interest rate increase. South Korean stocks led the regional gains, while Japan’s Nikkei also posted a strong rise.
MSCI’s broad index of Asia-Pacific shares excluding Japan climbed 0.97%, with South Korea’s Kospi jumping 4.4%. Japan’s Nikkei 225 gained 1.86%, while S&P 500 futures edged up 0.02%.
US Inflation Data Weighs on September Fed Hike Bets
US consumer prices increased 0.1% in July, matching economists’ expectations, according to data released on Wednesday.
The relatively modest increase has weakened expectations that the Federal Reserve will raise interest rates at its September meeting. According to CME Group’s FedWatch tool, financial markets were pricing in around a 40% probability of a rate hike next month, down from 54% a week earlier.
However, investors are expected to closely monitor incoming economic data before the Federal Open Market Committee (FOMC) meeting.
August inflation figures will be released before the September policy gathering, while oil prices have also moved higher since July. Den Miki, senior rate strategist at SMBC Nikko Securities, said both markets and the Federal Reserve are likely to assess the latest economic information until shortly before the meeting.
Wall Street Ends Mixed
US markets had a relatively subdued session overnight.
The Nasdaq Composite and S&P 500 managed to finish slightly higher, while the Dow Jones Industrial Average ended lower.
The mixed performance reflected continued uncertainty over the future direction of US monetary policy, particularly as investors weigh inflation, interest rates and energy prices.
Oil Prices Remain Elevated Amid Gulf Tensions
Oil prices slipped in Asian trading but remained relatively high as markets continued to monitor developments between the United States and Iran.
US crude futures declined 0.83% to $82.58 a barrel, while Brent crude dropped 0.71% to $88.35 per barrel.
Negotiations between Washington and Tehran over efforts to establish a lasting end to the Gulf conflict have reportedly made little progress. According to a senior Iranian source, discussions aimed at reviving a June interim agreement have stalled, with no timetable yet established for implementation.
US President Donald Trump said Washington had “total control” over the Strait of Hormuz, but Iran rejected the statement and maintained that the strategically important shipping route remained blocked.
Dollar Weakens Slightly Against Yen
The US dollar slipped 0.06% against the Japanese yen to 159.32, as investors increased bets that the Bank of Japan could raise interest rates as early as next month.
Earlier expectations had pointed towards a December move, but stronger Japanese price data have contributed to speculation of an earlier policy adjustment.
Japan’s wholesale prices increased 7.2% year-on-year in July, highlighting broader inflationary pressures within the economy.
Meanwhile, the US dollar index, which tracks the greenback against a basket of major currencies including the euro and yen, remained largely unchanged at 99.93.
US Treasury Yields Edge Higher
The yield on the benchmark 10-year US Treasury note rose slightly to 4.688%, compared with 4.682% at the close of trading on Wednesday.
Bond markets remain highly sensitive to expectations surrounding the Federal Reserve’s next policy moves, making upcoming inflation and economic data particularly important for investors.
Australia Signals Impact of Earlier Rate Hikes
In Australia, Reserve Bank of Australia Assistant Governor Christopher Kent said the three interest rate increases implemented earlier this year were beginning to have the desired impact.
Speaking at a Reuters NEXT Newsmaker event in Sydney, Kent said tighter monetary policy would take time to fully influence economic activity and inflation.
The Australian dollar remained broadly stable against the US currency at around $0.7062.
Gold and Silver Continue to Gain
Precious metals also moved higher during Asian trading.
Spot gold rose 0.28% to $4,419.28 an ounce, while spot silver gained 0.3% to $65.50 an ounce.
The movement in precious metals came as investors continued to assess interest-rate expectations, currency movements and geopolitical risks.
Asian Markets Stay Focused on Fed and Geopolitics
The latest rally across Asian equities reflects a combination of factors, including softer expectations for an imminent US rate increase and improving investor sentiment.
However, markets remain exposed to several risks. Upcoming US inflation data, central-bank decisions, movements in crude oil prices and continuing tensions in the Gulf could all influence global asset prices in the coming sessions.
For now, the weaker-than-feared US inflation reading has given Asian investors some relief, with South Korean and Japanese stocks leading Thursday’s regional gains.