Asian Stocks Rise After Soft US CPI, Kospi Rallies: Markets Wrap

(Bloomberg) — Asian shares rose as cooler-than-expected US inflation data reduced expectations of Federal Reserve interest-rate hikes and the artificial intelligence trade gathered fresh momentum. Oil rose.

MSCI’s Asia Pacific equities gauge climbed 1.2%, with more than three stocks advancing for every decliner. South Korea’s Kospi jumped more than 6%, led by a 10% gain in SK Hynix Inc. after its American depositary receipts surged 27%. Shares also rose in Japan and Australia, putting the regional benchmark on track for a second day of gains.

Treasuries steadied after a rally sent yields sharply lower Tuesday as traders unwound bets that the Fed would begin raising interest rates as soon as this month. The dollar weakened against all of its Group-of-10 peers, while gold held its gains from Tuesday to trade around $4,050 an ounce.

Oil rose for a third day as President Donald Trump threatened further strikes on Iran, hours after the US resumed its blockade on the Islamic Republic’s shipping through the Strait of Hormuz. Global benchmark Brent advanced 1.8% to above $86 a barrel after surging 11% in the previous two sessions.

The weak US inflation numbers and a strong start to the earnings season have revived the AI trade, boosting technology stocks after a recent bout of volatility. While the data gives the Fed more room to keep rates on hold, escalating tensions in the Middle East continue to cloud the inflation outlook by threatening higher energy prices.

“Softer than expected CPI is a big relief,” said Tiffany Wilding at Pacific Investment Management Co. While the “report will not eliminate discussion of further tightening entirely, it should effectively remove a July rate hike from consideration.”

What Bloomberg’s Strategists Say…

“Fuel futures are far more elevated than crude peers, suggesting investors are complacent in pricing for this year’s energy supply shocks to rapidly fade, especially given the recent escalation in the US-Iran conflict. That’s a dynamic that will haunt equities, credit and bonds, given investors have been so willing to bet that the impact of wars in the Middle East and Europe would prove transitory.”

— Garfield Reynolds, MLIV Asia Team Leader. Click here for the full analysis.

Attention in Asia will once again be on the chips sector after a volatile session on Tuesday.

The premium for SK Hynix’s ADRs over their Korean-listed shares soared to more than 50%, just three days after making their US trading debut.

Earlier, the S&P 500 rose with after major banks posted solid results, while a rally in chipmakers helped lift the Nasdaq 100. International Business Machines Corp. sank 25% on a sales miss.

In oil, traders are paying close attention to refined products. Fuel markets in the US and Europe are flashing record tightness as tensions flare up in the Middle East, threatening more pain for consumers already strained with high prices at the pump.

Also, Russia is struggling to deliver all of the crude it’s being forced to ship overseas in the face of escalating Ukrainian drone strikes on its refineries.

Elsewhere, in testimony before US lawmakers, Fed Chairman Kevin Warsh said central bank officials have no tolerance for high inflation, reiterating a vow to tame price growth.

Warsh said the June inflation reading was better than expected, but has a long way to go.

“I’m not going to show up here and say mission accomplished,” Warsh said. “What I’d say is there’s plenty of work to do.”

Corporate Highlights:

Chinese AI pioneer DeepSeek has begun preparations for an initial public offering and may file as soon as this year, setting the stage for what could be a landmark debut for the country’s technology industry. JPMorgan Chase & Co. saw its highest quarterly profit ever as stock traders blew past estimates and a long-held Visa Inc. stake paid off to the tune of $4.6 billion. Goldman Sachs Group Inc. trounced its own Wall Street stock-trading records, posting $7.42 billion for a quarter that saw indexes rip higher amid market volatility. Bank of America Corp.’s stock traders notched a record during the second quarter while its investment bankers capitalized on a dealmaking resurgence. Wells Fargo & Co. reported earnings that beat estimates on higher fees from wealth management and investment banking. A slew of Citigroup Inc.’s key business lines surpassed expectations, although the bank’s record haul in stock trading fell short of the growth posted by rivals. Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 9:45 a.m. Tokyo time Hang Seng futures rose 0.2% Nikkei 225 futures (OSE) rose 0.7% Japan’s Topix rose 0.6% Australia’s S&P/ASX 200 rose 0.5% Euro Stoxx 50 futures fell 0.2% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1427 The Japanese yen was little changed at 162.21 per dollar The offshore yuan was little changed at 6.7726 per dollar Cryptocurrencies

Bitcoin rose 0.3% to $64,742 Ether rose 0.2% to $1,878.98 Bonds

The yield on 10-year Treasuries was little changed at 4.59% Japan’s 10-year yield declined eight basis points to 2.705% Australia’s 10-year yield declined two basis points to 4.89% Commodities

West Texas Intermediate crude rose 1.5% to $80.54 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.

–With assistance from Stephen Kirkland.

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