Asian Markets Rally as U.S. Inflation Data Cools Rate Hike Fears

The July consumer price index rose a modest 0.1%, a figure that has significantly recalibrated market sentiment regarding monetary policy. Traders have slashed the probability of a Federal Reserve rate hike next month to 40%, down from 54% just one week ago. This shift in outlook provided a welcome tailwind for regional bourses, even as Wall Street finished Wednesday’s session with a mixed performance, marked by slight gains for the Nasdaq and S&P 500 alongside a modest decline for the Dow Jones.

Energy markets remain anchored by geopolitical friction, with crude oil holding steady near $80 per barrel. The ongoing diplomatic stalemate between the United States and Iran regarding Gulf negotiations continues to loom over supply expectations, keeping prices elevated despite the broader optimism filtering through equity indices. Investors are now balancing the prospect of a less hawkish Fed against the persistent uncertainty surrounding global energy security.