Asian Markets Surge as US Inflation Rates Drop Unexpectedly

Asian markets rallied on Wednesday after a surprise drop in US inflation rates, causing market expectations for interest rate hikes to decrease. This led to a rebound in oil prices and a rise in tech stocks. In contrast, IBM's shares fell 25% due to missed revenue forecasts.

The US Consumer Price Index (CPI) fell by 0.4% in June, its first decline since the COVID-19 pandemic. The annualized core inflation rate of 2.6% was lower than expected, leading to a decrease in market expectations for a July interest rate hike from 32% to 16%. J.P. Morgan analysts stated that this 'print should remove any fears over a July rate hike and may assuage fears on September, too.'

The US dollar weakened against most currencies except the yen. Short-end bonds rallied, with two-year Treasury yields dropping by 11 basis points to 4.19%. Brent crude futures steadied around $85.50 per barrel.