Asian Stocks Rise, US Rate Hike Odds Drop Ahead of CPI Report

Asian stocks increased on Monday as the likelihood of a September US rate hike fell sharply, allowing global markets to continue last week's record performance. Japan's Nikkei and South Korea's KOSPI saw marginal gains, while the MSCI Asia-Pacific index outside Japan also rose, following Wall Street's record close on Friday. Futures markets now indicate a 44% chance of a Federal Reserve rate increase at its September meeting, down from 67% a week prior, influenced by a soft US jobs report that lowered Treasury yields and boosted global risk appetite. The upcoming consumer price index (CPI) report for July is crucial, with analysts predicting a 0.1% increase in headline inflation and 0.2% for core inflation. JPMorgan's chief US economist noted that a core CPI of 0.22% may not be sufficient for a Fed hike, but repeated figures closer to 0.3% could trigger action. Rising rate expectations typically dampen risk appetite, impacting Bitcoin and digital assets. Oil prices are also a factor, with Brent crude rising 0.9% to 84.32 dollars per barrel and US crude up 0.7% to 78.74 dollars, influenced by developments in shipping lanes through the Strait of Hormuz. A strong CPI report could reignite rate hike speculation, affecting the current market rally. The dollar weakened as rate fears eased, with the euro nearing a seven-week high at 1.1557 dollars.

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