Asian stocks rise as US inflation data dents September Fed hike bets

Asian markets experienced a rise on Thursday following U.S. inflation data that fell short of expectations, influencing the Federal Reserve's potential interest rate hikes in the near term. The MSCI's Asia-Pacific index outside Japan increased by 0.97 percent, with South Korean stocks seeing a significant jump of 4.4 percent. Japan's Nikkei rose 1.86 percent, while the S&P 500 E-minis saw a minimal gain of 0.02 percent.

U.S. consumer prices rose by 0.1 percent in July, aligning with expectations, which might weaken the case for an interest rate increase from the Fed next month. Money markets now predict a 40 percent chance of a rate hike, down from 54 percent a week prior, according to CME Group's FedWatch. Upcoming August CPI data and the rise in crude oil futures since July will likely prompt the Fed and markets to closely monitor the data before the September FOMC meeting, as noted by Den Miki, a senior rate strategist at SMBC Nikko Securities.

Both the Fed and markets will likely assess the data right up until just before the September FOMC meeting. Oil prices hovered near $80 a barrel as tensions between the U.S. and Iran surrounding the Gulf war remained unresolved, with no progress made in reviving a June interim agreement and no set timeline for its implementation.

President Donald Trump claimed total control over the Strait of Hormuz, a statement Iran swiftly rejected, stating that the route remained blocked. The dollar weakened against the yen by 0.06 percent to 159.32, with growing speculation that the Bank of Japan would hike interest rates earlier than initially expected in December. This was further supported by Japan's wholesale prices, which surged 7.2 percent in July compared to a year earlier, indicating broader price pressures.

The dollar index, which gauges the greenback against a basket of currencies including the yen and the euro, remained stable at 99.93. The yield on the benchmark U.S. 10-year notes increased by 0.62 basis points to 4.688 percent from 4.682 percent late on Wednesday. Reserve Bank of Australia Assistant Governor Christopher Kent stated that the three interest rate hikes earlier this year were achieving their intended effects and would, over time, discourage spending.

He mentioned that it would take some time for tighter monetary policy to fully impact economic activity and inflation. The Australian dollar remained steady against the greenback at $0.7062. Gold prices saw a modest rise of 0.28 percent to $4,419.28 per ounce, while silver increased by 0.3 percent to $65.50 per ounce.