Asian stocks rose on Thursday after US inflation data came in line with expectations, easing expectations of another near-term interest rate hike by the Federal Reserve.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.97 per cent, led by South Korean shares, which jumped 4.4 per cent.
Japan’s Nikkei also advanced 1.86 per cent, while S&P 500 E-minis edged up 0.02 per cent.
The gains followed data showing that US consumer prices increased 0.1 per cent in July, in line with market expectations.
The modest increase weakened expectations of a rate hike at the Federal Reserve’s September meeting. Money markets were pricing in a 40 per cent probability of a rate increase next month, down from 54 per cent a week earlier, according to CME Group’s FedWatch tool.
However, analysts said investors would continue to monitor incoming economic data ahead of the September Federal Open Market Committee meeting.
“With August CPI data due before next month’s Federal Open Market Committee meeting and crude oil futures rising moderately since July, both the Fed and markets will likely want to assess the data right up until just before the September FOMC,” Den Miki, senior rate strategist at SMBC Nikko Securities, said in a note.
Wall Street ended mixed on Wednesday, with the Nasdaq Composite and S&P 500 recording marginal gains, while the Dow Jones Industrial Average declined.
Oil prices eased in Asian trading but remained elevated amid continued uncertainty over the conflict in the Gulf.
US crude fell 0.83 per cent to $82.58 a barrel, while Brent crude declined 0.71 per cent to $88.35 per barrel.
Markets remained focused on the continuing standoff between Iran and the United States over efforts to reach a permanent end to the war in the Gulf.
A senior Iranian source said talks aimed at reviving an interim agreement reached in June had made no progress, with no timetable established for its implementation.
US President Donald Trump said the United States had “total control” over the Strait of Hormuz, a claim rejected by Iran, which maintained that the crucial shipping route remained blocked.
In currency markets, the dollar weakened slightly against the yen, falling 0.06 per cent to 159.32 yen, as expectations grew that the Bank of Japan could raise interest rates as early as next month instead of December.
Those expectations were strengthened by Japanese wholesale prices, which rose 7.2 per cent year-on-year in July, signalling broader price pressures in the economy.
The dollar index, which measures the greenback against a basket of major currencies including the yen and euro, was largely unchanged at 99.93.
The yield on the benchmark US 10-year Treasury note rose 0.62 basis points to 4.688 per cent from 4.682 per cent on Wednesday.
Meanwhile, Reserve Bank of Australia Assistant Governor Christopher Kent said the three interest rate increases implemented earlier this year were having their intended effect and would gradually discourage spending.
Speaking at a Reuters NEXT Newsmaker event in Sydney, Kent said it would take “some time for tighter monetary policy to have its full effect on economic activity and inflation.”
The Australian dollar remained broadly stable against the greenback at $0.7062.
In commodities, spot gold rose 0.28 per cent to $4,419.28 an ounce, while spot silver gained 0.3 per cent to $65.50 an ounce.
