Asia-Pacific markets rose on Wednesday, with South Korea’s Kospi up 6.3%.
Small-cap Kosdaq gained 4%. Japan’s Nikkei 225 and Topix each added 0.9%. Australia’s benchmark S&P/ASX 200 was 0.6% higher.
The US consumer price index fell 0.4% in June from the previous month, bringing the annual inflation rate to 3.5%. Economists polled by Dow Jones had expected a monthly decline of 0.2% and annual inflation of 3.8%.
The report prompted traders to lower expectations for near-term Fed tightening. The probability of an interest rate hike at the central bank’s July meeting fell to 17% from 42% a day earlier, according to CME’s FedWatch Tool, SEEbiz reports. Markets, however, still expect a rise later this year, with traders estimating a 63% chance that interest rates will be a quarter or half a percentage point higher after the September meeting.
“While energy has played a large role in slowing prices, the easing has been fairly broad and spread across a range of categories, which is a relief for investors,” Adam Crisafulli, founder of Vital Knowledge, said in a note.
“However, the Fed and the economy are not safe—inflation remains elevated on an absolute basis, oil is back on an upward trajectory, and AI is currently proving very inflationary.”
Investors will turn their attention to another busy day of earnings on Wednesday, with United Airlines, Morgan Stanley, Johnson & Johnson and BlackRock reporting quarterly results.
The earnings season is off to a good start. JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and Goldman Sachs beat analysts’ expectations when they reported results on Tuesday.
