By Satoshi Sugiyama
TOKYO, Aug 13 (Reuters) – Asian stocks climbed on Thursday as tame U.S. inflation data cooled expectations of a Federal Reserve rate hike next month, while oil slipped as focus shifted to demand concerns from stalled U.S.-Iran peace efforts.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.08%, led by South Korean shares jumping 3.78%. Japan’s Nikkei gained 1.67% on chip-related stocks and a robust earnings outlook.
“Markets are remaining relatively resilient because economic growth is good and accelerating,” said Olga Bitel, chief investment strategist at William Blair Investment Management. “We thus expect overall financial markets to remain well behaved, notwithstanding a period of intra-market leadership rotation.”
U.S. consumer prices increased 0.1% in July, in line with expectations, data showed on Wednesday. The small increase could weaken the argument for an interest rate increase from the Fed next month. Money markets are predicting a 34% chance of a rate hike, down from 55% a week ago, according to CME Group’s FedWatch.
Attention now shifts to the producer prices data, due later in the day, for confirmation that inflation pressures are moderating.
U.S. S&P 500 E-minis were up 0.12% and Nasdaq 100 E-minis were 0.2% higher. Euro Stoxx 50 futures gained 0.44%, German DAX futures rose 0.28% and FTSE futures nudged 0.25% higher.
In the oil market, prices eased on a weaker demand outlook following a surprise build in U.S. crude stocks and lower consumption forecasts from OPEC and the International Energy Agency. U.S. crude pared earlier losses to trade 0.37% lower at $82.96 a barrel, while Brent slipped 0.2% to $88.80.
Iran and the U.S. remained at loggerheads over efforts to agree a permanent end to the war in the Gulf, with talks to revive a June interim agreement making no headway and no timetable set for its implementation, a senior Iranian source said.
President Donald Trump said the U.S. has “total control” over the Strait of Hormuz, a claim swiftly rejected by Iran, which said the route remained blocked.
Against the yen, the dollar softened 0.04% to 159.33, amid growing speculation that the Bank of Japan would hike interest rates next month, earlier than the previously expected December timeline. Those expectations were reinforced by Japan’s producer price index, which rose 7.2% in July from a year earlier, highlighting broadening price pressures.
Bloomberg News reported Prime Minister Sanae Takaichi’s government is supportive of a near-term rate hike, with the next move likely either in September or October, citing people familiar with the matter. The dollar/yen pair barely reacted to the report.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was steady at 99.96 but was on course for a weekly rise of 0.36%.
The yield on benchmark U.S. 10-year notes fell 1.37 basis points to 4.678%, from 4.692% late on Wednesday.
The New Zealand dollar dropped 0.5% to a two-week low of $0.5829 after a surprisingly low reading on inflation expectations stirred doubts about the need for aggressive rate hikes.
In Sydney, Reserve Bank of Australia Assistant Governor Christopher Kent warned of the risk of further policy tightening at a Reuters NEXT Newsmaker event, saying inflation threats remain on the upside and “a lot of things” would need to go right to avert another rate hike.
The Australian dollar edged lower versus the greenback at $0.7046.
Spot gold fell 0.21% to $4,397.88 an ounce, while spot silver fell 0.02% to $65.29 an ounce.
(Reporting by Satoshi Sugiyama; Editing by Shri Navaratnam)
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