Asian Markets Climb as Soft US Inflation Tempers Fed Rate Hike Expectations

Asian equities advanced on Thursday, buoyed by US inflation data that came in line with expectations and cooled speculation about an imminent Federal Reserve interest rate increase. The MSCI's broadest index of Asia-Pacific shares outside Japan climbed 0.97%, with South Korean stocks leading the charge with a 4.4% jump. Japan's Nikkei also gained 1.86%, while US futures pointed to a flat open.

The latest US consumer price data showed a modest 0.1% increase in July, matching forecasts. This softer reading has prompted money markets to reassess the likelihood of a Fed move next month, with the probability of a September hike now priced at 40%, down from 54% a week earlier. With another inflation report due before the Federal Open Market Committee meeting, analysts suggest both policymakers and investors will likely wait for more data before committing to a course of action.

In currency markets, the dollar eased slightly against the yen, trading around 159.32, as expectations grew that the Bank of Japan could tighten policy as soon as next month. These bets were reinforced by Japan's wholesale prices, which rose 7.2% in July from a year earlier, signaling broadening price pressures. The dollar index held steady at 99.93.

Oil prices dipped but remained elevated, with US crude falling 0.83% to $82.58 a barrel and Brent slipping 0.71% to $88.35. The market continues to monitor tensions in the Gulf, where the US and Iran remain at odds over efforts to end the conflict. Washington claims total control over the Strait of Hormuz, a statement Tehran has rejected.

Elsewhere, the Reserve Bank of Australia's assistant governor noted that earlier cash rate increases were having their intended effect, though he cautioned that tighter policy would take time to fully impact economic activity and inflation. The Australian dollar held steady against the greenback. Gold edged up 0.28% to $4,419.28 an ounce, while silver gained 0.3%.