Most Asian stock markets advanced after US inflation data came in below expectations, strengthening market expectations that the Federal Reserve is less likely to raise interest rates in the near term. However, continued geopolitical tensions in the Middle East limited broader gains.
US stock index futures also moved higher during Asian trading after Wall Street closed the previous session with gains.
Japan’s Nikkei 225 rose about 1%, while the broader Topix index gained 0.5%. South Korea led regional markets as the Kospi surged nearly 7%, supported by strong gains in semiconductor shares.
SK Hynix jumped about 13% after the company’s American depositary receipts posted strong gains in the previous session. Samsung Electronics rose nearly 8% following reports that the company was considering plans to list its shares in the US market.
US data showed that the headline Consumer Price Index fell 0.4% in June, marking the first monthly decline since the coronavirus pandemic. Core inflation remained steady at 2.6%, below market expectations.
The figures reduced investor expectations for a US interest rate increase this month, pushing Treasury yields lower and supporting gains in US equities, particularly technology shares.
Risk appetite remained limited by rising geopolitical tensions after US President Donald Trump warned of further military action against Iran. The US blockade on shipping linked to Iran through the Strait of Hormuz also remained in place.
Oil prices held near their highest levels in a month, reviving concerns that higher energy costs could add to inflationary pressures during the coming period.
In China, the Shanghai Composite and CSI 300 both declined about 0.3%, while Hong Kong’s Hang Seng index gained 1.5%.
Economic data showed that Chinese gross domestic product growth slowed to 4.3% year on year in the second quarter, compared with 5% in the first quarter. The reading was also below market expectations of 4.5%.
Economic activity data for June was mixed. Industrial production rose 5.3%, while retail sales increased 1%, with both readings exceeding analysts’ forecasts.
However, fixed asset investment fell 5.7% during the first half of the year, while property investment declined 18%, reflecting continued weakness in the real estate sector.
Across other regional markets, Australia’s S&P ASX 200 gained 0.3%, Singapore’s Straits Times index rose 1.2%, while futures linked to India’s Nifty 50 remained largely unchanged.
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