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Asian markets on Wednesday soared at the open after steep losses earlier this week, as better-than-expected U.S. inflation data for June eased immediate expectations of a Federal Reserve rate hike.
The gains were concentrated in tech-heavy Japan's Nikkei 225 and South Korea's Kospi, which rose around 1.4% and 6.9%, respectively. Hong Kong's Hang Seng also edged up 1.5%, while mainland China's Shanghai Composite slid 0.3%.
U.S. inflation declined to 3.5% in June from 4.2% in May, coming in below economists' expectations of 3.8%, largely driven by lower energy prices. On a monthly basis, the Consumer Price Index fell 0.4%, marking its first decline since 2020, while core inflation was unchanged from May and slowed to 2.6% year over year.
The data prompted traders to scale back expectations for a near-term Federal Reserve rate hike. Market pricing implies roughly a 15% chance of a quarter-point increase at the Fed's upcoming meeting, down from about 35% before the inflation report, according to CME Group's FedWatch Tool.
Even so, investors expect policymakers to keep the option of tightening later this year if price pressures pick up again.
Wall Street welcomed the figures, with the Nasdaq climbing 0.9% and the S&P 500 adding 0.4% as the 10-year Treasury yield fell about 5 basis points to around 4.56%, while the two-year yield dropped roughly 9 basis points to 4.18%, encouraging investors to return to technology stocks.
The Dow Jones Industrial Average also edged higher, though its gains were more modest.
Elsewhere in the markets on Wednesday, oil prices remained elevated with the international benchmark hovering around $85.5 per barrel, as the U.S.-Iran exchange of fire around the Strait of Hormuz continues.
Gold retreated 0.7% to $4,020 per ounce after surging more than 2.5% in the previous session to climb back above $4,100 per ounce following the inflation report. Silver also fell more than 1% to $58.1 per ounce, while platinum held steady at $1,620 and palladium gained 0.5% to $1,290 per ounce.
Cryptocurrencies, meanwhile, rallied as investors embraced riskier assets, with bitcoin climbing 4% to around $65,150 and ethereum gaining roughly 6% to $1,890.
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