A softer-than-expected U.S. inflation report for June triggered a broad rally across Asian equity markets on Wednesday, even as heightened geopolitical friction in the Middle East pushed crude oil prices higher following the resumption of a U.S. naval blockade near Iranian ports.
The South Korean Kospi led the regional surge, climbing 5.6% as heavyweights SK Hynix and Samsung Electronics saw share prices jump 11% and 5.9% respectively. The volatility prompted a temporary trading halt on the exchange. Elsewhere, Japan’s Nikkei added 0.85%, while Taiwan’s Taiex gained 1.7% and Hong Kong’s Hang Seng rose 0.7%.
Optimism stems from cooling headline inflation, which investors interpreted as a signal for the Federal Reserve to temper its aggressive interest-rate path. However, analysts remain cautious. Jonas Goltermann of Capital Economics warned that a single month of data is unlikely to alter the Fed's long-term trajectory, predicting three additional 25-basis-point hikes in the coming months.
Energy markets reacted sharply to U.S. Central Command’s confirmation of strikes against military targets near the Strait of Hormuz. West Texas Intermediate crude rose 1.0% to $80.22 a barrel, while Brent crude climbed 1.35% to $85.87. The gains followed President Trump’s decision to scrap a proposed 20% transit fee for commercial vessels in the strait, opting instead for new trade and investment agreements with Gulf states. Despite the policy pivot, ongoing attacks on tankers near Oman have left shipping routes increasingly precarious.
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