Asia Equities Rise on Soft US CPI; Nikkei 225 Up 1.35%, TAIEX Gains 1.0%

Lead Asian equities saw broad gains today, with Japan's Nikkei 225 closing up 1.35% and Taiwan's TAIEX rising 1.0%, driven by subdued US inflation data easing Federal Reserve rate hike concerns. The US 10-year yield is down 0.0427%, while the dollar-yen is up 0.0151% to 159.43. Session narrative Asian markets largely advanced today, buoyed by softer-than-expected US inflation data which reduced immediate concerns about aggressive Federal Reserve rate hikes. Japan's Nikkei 225 led the gains, closing up 1.35% at 68,439, while Taiwan's TAIEX climbed 1.0% to a five-week high of 45,989, with technology stocks performing strongly. New Zealand's NZX 50 also rebounded, closing up 0.6%. In contrast, Australian shares extended losses, falling 0.4% in early trade amid domestic inflation caution following the RBA's decision to hold rates steady at 4.35%. Sweden's CPI month-over-month printed at -0.3%, matching forecasts. The UK saw its goods trade balance widen to -23.007B and industrial production fall 0.2% month-over-month, though services MoM rose to 0.4%. Geopolitical tensions remain a backdrop, with reports of Russia's President Putin visiting the contested Kuril Islands and ongoing discussions around the Strait of Hormuz. Crude oil prices slipped, with WTI down 0.3002% and Brent down 0.2135%, partly due to doubts over the Strait of Hormuz deal and a significant build in US crude stockpiles earlier in the week. Cross-asset check The US 10-year yield is down 0.0427%, suggesting some easing of bond market pressure. The dollar-yen pair continued its upward trend, gaining 0.0151% to 159.43. The US Dollar Index is down 0.004%. In commodities, WTI crude is down 0.3002% at 83.02, and Brent crude is down 0.2135% at 88.79. Gold and silver also saw declines, with gold down 0.7476% and silver down 0.9132%. Copper is down 0.8918%. S&P 500 futures are up 0.1126%, Nasdaq futures are up 0.1633%, and Dow futures are up 0.0464%. Themes & continuing stories A key theme today is the market's reaction to softer US inflation data, which has led to a decline in Fed rate hike bets and boosted risk sentiment across Asian equities. Geopolitical tensions continue to simmer, notably with Russia's President Putin visiting the contested Kuril Islands, drawing a strong protest from Japan. Energy markets are also watching developments around the Strait of Hormuz, with doubts about a potential deal contributing to a slip in crude prices. In Australia, domestic inflation caution persists after the RBA held rates steady, leading to continued weakness in Australian shares. China's refined-fuel exports are expected to rise 22% this month, potentially easing shortages in Asia, while China is also reportedly shifting towards rebuilding oil inventories. What’s ahead Looking ahead, market participants will continue to monitor Fed interest rate probabilities for shifts in monetary policy expectations. The ongoing geopolitical developments, particularly those impacting energy supply routes and international relations, will also remain a focus. Further economic data from major economies will be closely watched for signs of inflation trends and economic growth.