US CPI cools more than expected, all Asia-Pacific stock markets rise, South Korean stocks surge over 7% triggering a circuit breaker, SK Hynix jumps 10%.

US CPI cools more than expected, all Asia-Pacific stock markets rise, South Korean stocks surge over 7% triggering a circuit breaker, SK Hynix jumps 10%.

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The unexpected sharp decline in U.S. inflation data fueled a broad rally on Wall Street and drove Asia-Pacific stock markets higher across the board on Wednesday, with South Korea's KOSPI leading the gains as memory chip stocks rebounded significantly.

During Wednesday’s Asia-Pacific session, South Korea’s KOSPI surged more than 7% at the open, leading the regional markets. The MSCI Asia-Pacific Index rose 1.2% overall, Japan’s TOPIX rose about 1%, and the Nikkei 225 rose about 1.49%.

Samsung Electronics rose over 7%, SK Hynix jumped over 10% in the Seoul market, after their US ADRs soared 27% in a single day previously.

As KOSPI 200 index futures rose by 5%, the Korea Exchange launched the Sidecar mechanism, suspending program trading on the KOSPI.

This strong rebound in South Korea's stock market largely benefited from the recovery in the U.S. memory chip sector the previous day.

Previously, on Tuesday, US AI semiconductor stocks rose 3.19%, AI software infrastructure up 3.24%, optical communications up 2.92%, and proxy AI up 2.93%. Individual stocks: Micron Technology closed up nearly 5%, Nvidia and Intel both rose more than 4%.

U.S. CPI cools more than expected in June, July rate hike expectations plummet

The June CPI data was the core driver of today’s market.

According to Wallstreetcn, U.S. inflation cooled across the board. U.S. June CPI rose 3.5% year-on-year, much lower than expected, with the first month-on-month decline in six years. Core CPI rose 2.6%, with the market’s worries about rate hikes receding rapidly.

Dan Carter, senior portfolio manager at Fort Washington, commented:

This is a full-blown downside surprise, and a near-term rate hike is basically off the table. The market previously remained highly vigilant against overheating inflation data; this report supports the bond market and will help re-steepen the yield curve. Our base case is that the Fed will hold steady, and this data supports that view.

Tiffany Wilding of Pacific Investment Management noted that this below-expectation CPI data is “a relief,” and though it won’t completely end talk of further tightening, it should effectively rule out a rate hike in July, supporting her view that the Fed will at least hold steady through 2026.

However, despite declining rate hike expectations, the market hasn't completely priced out at least one more rate hike this year, with the probability of a second hike roughly 50-50. eToro’s Bret Kenwell also warned:

Today’s data provide breathing room, but not an all-clear signal. Inflation may be cooling, but it hasn’t vanished.

Middle East tensions rise, oil prices under upward pressure

Although easing inflation improved risk sentiment, oil markets remain dominated by geopolitics.

The U.S. announced it would resume a naval blockade on vessels passing Iranian ports and coastal areas, and launched a new round of strikes on Iran at 3 p.m. U.S. Eastern Time. WTI crude oil rose about 1% to around $80 a barrel in early Asian trading.

At the same time, U.S. and European refined oil markets remain exceptionally tight, and heightened Middle Eastern tensions raise concerns over fuel supplies, with high oil prices continuing to pressure consumers.

Goldman Sachs’ Privorotsky believes Brent around $85 is still manageable, but the real story is in refined products: distillates signal inflation more than crude—the heating oil futures have hit new highs since the conflict erupted, highlighting the tension in refined product markets. Any further disruptions would disproportionately impact inflation.

He also warned that asymmetric warfare need not actually block the strait; just constraining shipping volumes is enough to raise energy prices, especially for larger, more expensive, and more explosive LNG carriers.

The U.S. dollar index saw slight downward pressure, adjusting down 0.09% during the Asia-Pacific session.

Spot gold continued its rise, edging up 0.12% to $4,058.

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