Asian markets experienced a mixed performance as investors reacted to stronger-than-expected US inflation data and robust earnings from technology giants like Nvidia, all while anticipating Federal Reserve Chair Kevin Warsh's speech at Jackson Hole. The Nikkei 225 fell by 0.1% to 0.2%, closing at 66,131.98 after opening at 66,262.16 and reaching a high of 66,954.69. Hong Kong's Hang Seng Index dropped 0.3% to 0.4%, while the Shanghai Composite rose by 0.1% to 0.6%. South Korea's Kospi surged by 1.4% to 1.83%, driven by gains in chipmakers like SK Hynix (up 2.6%) and Samsung Electronics (up 1.5%), while Taiwan's TSMC also advanced.
US inflation data showed the personal consumption expenditures (PCE) index climbing 0.2% monthly, and the core PCE, excluding food and energy, rising 0.2% monthly and 3.3% annually. The Federal Reserve's preferred inflation gauge remained at a three-year high of 3.7% in July, well above the 2% target. This data, coupled with a 1.5% US economic growth in the second quarter, has led money markets to price the likelihood of an October Federal Reserve rate hike at 62%, up from 57%. The 10-year Treasury yield climbed to 4.66%, and the US Dollar Index advanced 0.2% to 99.1 before trading flat.
Nvidia reported impressive quarterly results, with revenue surging 106% year-on-year to $96.2 billion and net income jumping 126% to $59.7 billion, surpassing analyst estimates. The chipmaker also provided an upbeat revenue outlook, expecting approximately $108 billion for the third quarter, driven by strong demand for AI chips and an expanded partnership with Amazon AWS. Following the earnings report, Nvidia's shares rose around 4% to 5% in after-hours trading. Other tech companies also saw gains, with Salesforce jumping 13% and Okta soaring over 20%. In contrast, the Dow Jones Industrial Average fell 0.2% to 0.21%, the S&P 500 dropped 0.02%, and the Nasdaq declined 0.08% on Wednesday, although US indexes opened Thursday on a positive note.
Concerns about persistent inflationary pressures led to risk aversion across asset classes. Brent crude for October delivery fell 0.4% to 0.5% to $87.5 per barrel amid reports of Russia escalating the war in Ukraine. Gold prices declined 1.4% to $4,594 per ounce on Wednesday but recovered to trade at $4,621 on Thursday, supported by central bank purchases despite rising rate expectations. The Bank of Korea raised its policy rate by 25 basis points to 3% to counter inflation, while China's industrial profits grew 11.2% in July, the slowest pace since December 2025, with weak domestic demand persisting despite easing deflationary pressures.
Investors are closely watching Federal Reserve Chair Kevin Warsh's upcoming speech at the Jackson Hole Economic Policy Symposium for guidance on monetary policy. His remarks will be crucial in shaping market expectations regarding inflation, oil prices, fiscal pressures, and long-term interest rates. Analysts anticipate that the strong economic indicators provide little reason for Warsh to hint at any dovishness. Hopes for easing inflation were also partially supported by falling oil prices as Iran and Oman moved towards a deal for a temporary shipping corridor in the Strait of Hormuz.
