July US CPI printed in line with expectations at +3.4% YoY, providing meaningful relief on the inflation front and prompting money markets to price in less than a 50% probability of a September Fed rate hike. Geopolitical tensions between the US and Iran continued to linger, with uncertainty around the Strait of Hormuz keeping crude oil supported near USD 83/bbl (WTI) and Brent near USD 89/bbl. Risk sentiment improved materially on the tame inflation print and a powerful AI-driven equity rally, with the VIX declining 4.78% to 14.55 — signalling a broadly constructive risk environment heading into Thursday's session. Fed Chair Kevin Warsh's continued emphasis on reduced forward guidance remains the dominant central bank narrative, keeping markets attuned to each data release rather than policy signals.
The constructive US session, anchored by Technology's +1.49% sector gain and SMCI's +19% surge on AI infrastructure earnings, sets a positive tone for Asia-Pacific markets opening Thursday. The RBA's 25bp rate cut to 3.6% — its lowest level in over two years — delivered domestically, supporting Australian equities toward record highs, though the ASX 200 finished Wednesday's session down 0.45% as the prior close reflected some give-back. The Nikkei VIX spike of +28.29% to 32.06 is a notable divergence from the US VIX decline and warrants close attention, suggesting elevated hedging demand in Japanese markets despite the Nikkei 225's +0.83% gain. KOSPI's standout +3.68% rally and gold's continued advance to USD 4,408.90/oz underscore the broadening of risk appetite, with precious metals and growth markets both catching a bid.