Asian stocks gain before US CPI data, oil climbs

Asian stocks climbed ahead of key US inflation data, as expectations grew that the US Federal Reserve may refrain from aggressive interest rate hikes in 2027. Crude oil also rose. MSCI's Asia Pacific equities index increased by 0.6%, recovering from a two-day decline that brought the gauge to its lowest close since August on October 13.

Among notable moves, S&P 500 futures rose 0.1% at 12:01 pm Tokyo time. Japan's Topix remained relatively unchanged, Australia's S&P/ASX 200 slipped by 0.7%, Hong Kong's Hang Seng gained 0.3%, and the Shanghai Composite increased by 0.2%. Sentiment improved after New York Fed president John Williams stated no additional tightening was needed in 2027, while still anticipating one more rate hike for 2026.

Swaps now price in less than a 25% chance of a rate increase in October. The global crude oil benchmark, Brent, climbed 0.8% to $106.55 a barrel due to a flare-up in Middle East attacks sparking uncertainty over energy shipments from the Persian Gulf. US crude advanced for a fifth consecutive day. The CPI numbers will be crucial, as elevated oil prices could maintain price pressures.

Traders are also watching US corporate earnings for insights on the artificial intelligence trade, which has faced doubts about the return on billions in spending. The CPI data will provide further clues about interest rates, and a stronger-than-expected inflation print could reignite expectations of further Fed tightening. Meanwhile, the benchmark 10-year yield stood at 5.21%.

US stocks ended the day weaker, with the benchmark S&P 500 edging up 0.1%. Chinese stocks found themselves closer to a bear market, with the CSI 300 Index falling 0.2%. Skepticism grows about heavy support measures to revive the economy and bolster investor confidence, as the benchmark has dropped over 15% from its June peak, settling at the lowest level since August 2025.