A single tenth of a percentage point in a monthly inflation reading just moved billions of dollars across Asian equity markets. July’s US Consumer Price Index came in at 0.1% month-on-month, exactly matching analyst forecasts, and that was enough to spark a broad rally from Tokyo to Seoul.
The year-on-year inflation rate dipped to 3.4% from June’s 3.5%. Not a dramatic swing by any measure, but in a market obsessively parsing every data point for clues about the Federal Reserve’s next move, even a small downward tick in inflation carries outsized weight.
The rally in numbers
The MSCI Asia-Pacific ex-Japan index climbed 0.97% on August 13, a respectable move for an index covering some of the world’s largest economies. But the real fireworks were in Seoul.
South Korea’s KOSPI surged 4.4%, a single-day jump that would be noteworthy even during earnings season. Japan’s Nikkei 225 added 1.86%, rounding out a strong day for the region’s two largest developed markets.
