Mixed reactions in Asia: US inflation cools, yen rises

Asia-Pacific markets were mixed on Friday following the release of US inflation data for June. The news, which showed inflation hitting a three-year low of 3%, gave the Federal Reserve more leeway for potential rate cuts in the coming months. Core inflation data also came in slightly lower than expected.

Yen Strengthens on Suspected Intervention

The Japanese yen surged against the U.S. dollar after the release of U.S. inflation data. The unexpected move prompted analysts and traders to suspect intervention by Japan’s Ministry of Finance. The currency jumped from around 161.52 on Thursday evening to 158.55 at noon Tokyo time, and further strengthened to 158.23. Japan’s top currency diplomat Masato Kanda acknowledged the rapid move and said authorities would take appropriate measures in the foreign exchange market, but did not confirm or deny intervention.

Japanese markets reverse regional trend

Despite positive news from the United States, Japan’s Nikkei 225 bucked the regional trend and fell 1.97%, leading losses in Asia after a record high the previous day. The broader Topix index also fell 0.93%.

Divergent performances in Asia

Other markets in the region showed a mix of gains and losses. South Korea’s Kospi and Kosdaq indexes fell slightly, while Hong Kong’s Hang Seng index rose 1.54%. The CSI 300 index in mainland China saw a modest decline of 0.24%.

Australia hits new highs

Australia’s S&P/ASX 200 Index bucked the trend, breaking its all-time closing high with a 0.92% gain. This comes on the heels of an all-time high reached in March.

US Defense Loses Momentum

In the United States, major indexes retreated from their all-time highs overnight. Investors appeared to have shifted their focus away from major technology companies, leading to declines for Nvidia and Meta Platforms. The S&P 500 fell 0.88%, while the Nasdaq Composite fell 1.95% after an early rally and a significant decline for Nvidia. The Dow Jones Industrial Average, however, managed to eke out a small gain of 0.08%.

By Jenny Molina

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