Asian Stocks Surge on Soft US Inflation Data

Asian stock markets rallied on Wednesday as investors reacted to soft US inflation data that eased fears of potential Federal Reserve rate hikes.

The MSCI Asia Pacific Index rose 0.6%, with Japan and South Korea leading the advance. The Kospi in South Korea surged 4.48%, making it the region's standout performer, while the Nikkei 225 climbed 1.83% and the Topix added 1.01%.

The gains built on a strong session on Wall Street, where the S&P 500 pushed to within touching distance of a fresh record high. The Nasdaq 100 also reached a one-month peak due to a rally in major chipmakers.

Core CPI in the US rose 0.2% on the month and 2.5% over the year, matching its slowest annual pace since March 2021. This soft inflation reading led traders to trim their bets on further policy tightening, with money markets pricing in less than even odds of a September rate rise.

The Japanese yen held steady around the 159.30 per dollar mark early Thursday, edging closer to the closely watched 160 threshold. Traders remain alert for possible intervention from Japanese officials to defend the currency.