U.S. inflation slowdown powers Asian market rally as U.S.–Iran tensions rise

U.S. consumer‑price data for June showed a 0.4% month‑on‑month decline, bringing annual inflation down to 3.5% from 4.2% and core inflation to 2.6% versus a 2.8% forecast. The surprise drop cut the market’s estimate of a July Fed rate hike to roughly 16% and lifted risk appetite worldwide.

Asian equities jumped on the news. South Korea’s KOSPI surged 6‑7% after SK Hynix rallied more than 10% on the back of the broader semiconductor rally, while Samsung also rose sharply. Japan’s Nikkei gained around 0.4% and the MSCI Asia‑Pacific index (ex‑Japan) was up about 2‑3%. The rally was tempered by a 25% plunge in IBM shares following a revenue miss.

European markets opened mixed, with the Stoxx 600 edging lower amid heightened risk aversion from renewed U.S.–Iran clashes. Oil prices hovered near $85‑86 a barrel after the United States re‑imposed a naval blockade of Iranian ports and scrapped a planned 20% Hormuz shipping fee. In the Netherlands, ASML posted earnings that beat expectations and raised its 2026 sales outlook, sending the stock up roughly 6% and reinforcing its role as a key AI‑chip equipment supplier.

Fed officials, including Kevin Warsh, cautioned that inflation remains a concern, but the softer data lowered expectations of immediate further rate hikes. The combination of weaker U.S. inflation, strong semiconductor earnings, and geopolitical tension continues to shape global market sentiment.