Asian markets rally after soft U.S. inflation data

July 15, 2026 (MLN): Asian markets traded higher on Wednesday, supported by gains on Wall Street after weaker-than-expected U.S. inflation data strengthened expectations that the Federal Reserve may adopt a less aggressive monetary policy stance.

South Korea led regional gains, with the Kospi surging 6.3%, while the small-cap Kosdaq advanced 4%. Japan's Nikkei 225 and the broader Topix both rose 0.9%, while Australia's S&P/ASX 200 added 0.6%, according to CNBC.

Ahead of the session, Japan's Nikkei 225 was indicated to open higher, with Chicago futures at 68,400 and Osaka futures at 68,250, above the index's previous close of 67,743.50.

Hong Kong's Hang Seng futures also pointed to a firmer start at 24,400, compared with the previous close of 24,340.73. Australian futures traded at 8,817, slightly above the S&P/ASX 200's last close of 8,808.50.

Investor sentiment improved after U.S. consumer inflation slowed more than expected in June. The consumer price index declined 0.4% month-on-month, bringing annual inflation to 3.5%, compared with market expectations for a 0.2% monthly decline and a 3.8% yearly increase.

The softer inflation reading prompted traders to reduce expectations of an interest rate increase at the Federal Reserve's July meeting. According to CME FedWatch data, the probability of a July rate hike fell to 17% from 42% a day earlier.

However, markets continue to anticipate another rate increase later this year, with a 63% probability of rates being higher after the September meeting.

While lower energy prices played a significant role in easing inflation, price moderation was seen across several categories, offering reassurance to investors.

They also cautioned that inflation remains above target, rising oil prices and growing demand linked to artificial intelligence could continue to pose upside risks.

Developments in the Middle East also remained on investors' radar. Fresh U.S. airstrikes on Iran pushed oil prices higher, while U.S. President Donald Trump dropped a proposal to impose a 20% protection fee on ships transiting the Strait of Hormuz.

Investors are also awaiting another round of U.S. corporate earnings, with United Airlines, Morgan Stanley, Johnson & Johnson and BlackRock scheduled to report quarterly results later in the day.

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