Markets Briefing: KOSPI Surges as Softer US Inflation Revives the AI Trade, Oil Climbs on Hormuz
Asian equities rallied hard, led by South Korea, after a softer-than-expected US inflation reading revived the artificial-intelligence trade and prompted traders to price out a near-term Federal Reserve rate rise. The KOSPI jumped 7.19 per cent (BBG), reclaiming its place as the world's best-performing major benchmark this year as the chip sector rebounded and SK Hynix extended a post-listing surge.
US equity-index futures pointed higher, with the Nasdaq-100 contract up 0.80 per cent and S&P 500 futures up 0.19 per cent, while European futures were marginally lower, the DAX off 0.24 per cent and the Euro Stoxx 50 down 0.14 per cent. "Softer than expected CPI is a big relief," said Tiffany Wilding, an economist at Pacific Investment Management, adding that it should effectively remove a July hike from consideration even if it does not close the door on further tightening (BBG).
Across Asia, the tone was broadly firm. Japan's Nikkei rose 1.40 per cent and Hong Kong's Hang Seng gained 1.45 per cent, while India's Nifty added 0.64 per cent (BBG). A sense of caution lingered, however, as oil extended its advance for a third session amid renewed US strikes against Iran and the resumption of the Strait of Hormuz blockade (BBG), leaving equity gains shadowed by an energy-driven inflation risk that could yet factor into the Fed's calculus.
Central bank commentary remained hawkish at the margin even as the data softened. In congressional testimony on Tuesday, Fed Chair Kevin Warsh reiterated that officials have no tolerance for persistently high inflation and pledged to bring it back to target, calling the June print encouraging but insisting there is "plenty of work to do" (BBG). His remarks pared an intraday rally in short-dated Treasury bonds (BBG), a reminder that the July decision remains live even after the inflation relief.
In currencies, the dollar was broadly softer after the inflation data. The Dollar Index continued to weaken overnight, easing 0.12 per cent; the euro firmed 0.14 per cent; and the Australian dollar added 0.18 per cent (BBG). The yen was little changed against the greenback, holding near multi-decade lows, while the Korean won slipped 0.24 per cent even as local equities soared. Bloomberg reported that Japan's retail margin traders have built their largest bet against the dollar since 2008 (BBG), a sign that conviction in further yen weakness may be fading.
Government bonds steadied after Tuesday's sharp post-inflation rally. Japanese 10-year bonds rallied, with yields down 2.1 basis points, and Australian 10-year bonds firmed, with yields off around 1.1 basis points (BBG). US 10-year Treasuries edged the other way, with yields up 1.7 basis points as Warsh's testimony trimmed the move (BBG), while the Euro-Bund futures slipped 0.23 per cent.
In commodities, crude oil rose 0.74 per cent and natural gas gained 0.65 per cent as the Hormuz blockade and fresh strikes kept a bid under energy, with fuel markets in the US and Europe flashing record tightness (BBG).
Gold gave back some of the prior session's safe-haven gains, easing 0.47 per cent, and silver fell 0.39 per cent (BBG). Bitcoin slipped 0.41 per cent despite the broader risk-on tone.
On the data slate, China's second-quarter GDP slowed to 4.3 per cent on the year, below the 4.5 per cent consensus and down from 5.0 per cent, the softest reading of the year and under the official target range. The monthly activity data were firmer, with industrial production up 5.3 per cent against 4.7 per cent expected and retail sales back to growth at 1.0 per cent after a 0.6 per cent fall, though fixed-asset investment contracted 5.7 per cent year to date. South Korea's exports jumped 70.7 per cent on the AI and chip cycle, lifting the trade surplus to 36.09 billion dollars, while Japan's core machinery orders sank 12.4 per cent, a sharp miss pointing to soft capex.
In the corporate tape, IBM tumbled sharply after a preliminary second-quarter miss, its worst drop in decades, as clients diverted spending to supply-constrained servers and memory (Co), a warning shot for the tech complex even as the AI trade rallied elsewhere. Payment firm Stripe and Advent International offered to buy PayPal, according to a Reuters report, and Chinese AI developer DeepSeek was said to be preparing an initial public offering (BBG).
Looking ahead, the Bank of Canada is expected to hold for a sixth straight meeting, with the focus on the tone of its Monetary Policy Report as it balances renewed oil-price risk against an economy emerging from two quarters of contraction (BBG). Fed Chair Warsh returns for a second day of testimony this afternoon, and traders will also watch a heavy roster of speakers, including Fed voters Williams and Cook, for the first senior reaction to this week's inflation data, with the late-July FOMC meeting now the pivot for the rate-hike debate.
On the data front, US June PPI rounds out the pre-FOMC inflation picture. Headline is seen flat for the month as energy reverses, but core is expected to be firm at 0.4%, lifting the annual core rate to a cycle high of 5.2%. Because several PPI service categories feed into core PCE, the print sharpens the market's estimate of the Fed's preferred gauge ahead of the 27-28 July meeting. You can read the full Macro Roadmap piece here.
Time Stamp: 2026-07-15 07:00:00 CET