Reported by Tahir Ishaq Shehu

Asian markets traded lower on Wednesday after a stronger-than-expected U.S. inflation reading cast fresh doubt on the likelihood of interest rate cuts by the Federal Reserve this year. The dollar surged to multi-week highs, Treasury yields climbed, and regional equities felt the pressure though tech shares remained a relative bright spot.

U.S. Inflation Surprises to the Upside

June’s U.S. consumer price index rose 0.3% from the previous month, marking the largest increase since January. The hotter-than-expected reading has prompted investors to scale back expectations for monetary easing. Markets are now pricing in just 44 basis points of total cuts in 2025, and the probability of a single 25-basis-point reduction in September has fallen to 56.5%.

Yields on U.S. 10-year Treasury notes surged to their highest level in a month as investors reassessed the likelihood of near-term policy easing. Analysts noted that tariffs introduced earlier this year may have begun to exert upward pressure on prices.

Regional Markets Under Pressure

The inflation shock rippled through Asia-Pacific stock markets, which largely closed lower on the day:

Australia’s ASX 200 dropped 0.8%

South Korea’s KOSPI fell 1%

China’s CSI300 declined 0.5%

Hong Kong’s Hang Seng was also down, reflecting broader regional weakness

Japan’s Nikkei 225 ended flat, supported by a weaker yen, which tends to benefit export-heavy sectors.

Dollar Strengthens Broadly

The U.S. dollar index climbed to a three-week high, buoyed by rising yields and reduced expectations for rate cuts. The greenback strengthened significantly against the yen, euro, and several emerging market currencies. The yen weakened past 162 per dollar, its lowest level in a month.

In India, the rupee drifted toward ₹86 to the dollar as the global currency rally took hold. Foreign investors withdrew $91.8 million from domestic equities and $30.7 million from debt markets on July 14 alone.

Tech Stocks Offer a Glimmer

While most sectors faltered, technology shares were a notable exception.
Nvidia jumped nearly 4% after securing U.S. government approval to export advanced chips, lifting sentiment across the global tech sector. The rally helped temper losses in broader U.S. equity futures, which remained relatively stable ahead of key corporate earnings.

Investors are now turning their attention to second-quarter results from major banks, including Goldman Sachs and Bank of America, as well as upcoming macro data for further clues on economic momentum.

Commodity Markets Mixed

Gold gained 0.5% as investors sought safety amid rising volatility

Crude oil prices softened, with Brent and WTI holding near $79 and $75 per barrel respectively

Bitcoin rose around 1% following recent declines

Outlook: Eyes on PPI and Earnings

Markets are bracing for further economic signals this week, including the U.S. Producer Price Index, which could either reinforce or challenge the inflation trend. Corporate earnings season is also underway, with banks expected to provide valuable insight into credit conditions, consumer health, and forward guidance.

“This latest inflation print could push the Fed to hold rates higher for longer,” one market strategist noted. “Investors should be prepared for a more cautious Fed heading into the second half of the year.”