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

(Bloomberg) — Asian equities rose after an unexpectedly sharp slowdown in US inflation fueled a Wall Street rally and eased expectations about imminent Federal Reserve interest-rate hikes. Tech shares rallied.

The MSCI Asia Pacific Index climbed 1.2%, with South Korea’s Kospi leading with a 6% jump. SK Hynix Inc. shares climbed 10% in Seoul after its American depositary receipts surged 27%.

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.

Treasuries gained during the US session, sending yields tumbling as traders unwound bets that the Fed could begin raising interest rates as soon as this month. A gauge of dollar strength had its worst day in almost two weeks, while gold gained more than 1% on Tuesday to over $4,050 an ounce.

West Texas Intermediate crude edged higher in early Asia trading after the US said it resumed the naval blockade against vessels transiting to and from Iranian ports and coastal areas. American forces also launched a fresh wave of attacks on Iran. WTI climbed 1% to about $80 a barrel.

Consumer prices dropped in June for the first time in six years, and a key gauge of underlying inflation was little changed. Fed officials will likely welcome the data ahead of their upcoming meeting even as hostilities in the Persian Gulf risk prolonging the fallout from the conflict.

“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.”

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.

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.

Meanwhile, 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.

The CPI likely lowers pressure on the Fed to hike soon, but hostilities in Iran mean the prospect of hikes is far from over, noted Kay Haigh at Goldman Sachs Asset Management. While a path remains for rates to stay unchanged this year, the re-escalation of the conflict has narrowed it, Haigh said.

The “report provides breathing room, not an all-clear,” noted Bret Kenwell at eToro. “While inflation has cooled, it has not disappeared.”

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 rose 0.1% as of 9:07 a.m. Tokyo time Hang Seng futures rose 0.2% Japan’s Topix rose 0.8% Australia’s S&P/ASX 200 rose 0.7% Euro Stoxx 50 futures rose 0.3% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1427 The Japanese yen was little changed at 162.19 per dollar The offshore yuan was little changed at 6.7717 per dollar Cryptocurrencies

Bitcoin rose 0.7% to $64,969.55 Ether rose 0.8% to $1,890.46 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 three basis points to 4.88% Commodities

West Texas Intermediate crude rose 0.9% to $80.08 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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