Asian markets climbed on Wednesday, buoyed by easing U.S. inflation and a temporary pause in the global trade war, sparking renewed investor optimism. The U.S. dollar, however, continued to waver as traders assessed the long-term outlook for interest rate cuts and global trade dynamics.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.1%, reflecting a global sigh of relief after U.S. stocks erased losses that had been triggered by President Donald Trump’s aggressive tariff policies.
Hong Kong’s Hang Seng index jumped 1.4%, led by gains in tech shares following strong earnings from Chinese e-commerce giant JD.com.
Investors are now eyeing upcoming earnings reports from tech heavyweights Tencent and Alibaba, which could further influence market momentum.
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Despite the rally, analysts remain cautiously optimistic. “I’m just a little bit cautious here about chasing the rally in stocks at this level,” said Tony Sycamore, an analyst at IG. “We still need to see how the headlines evolve, especially around future tariff negotiations.”
The market’s mood improved after softer-than-expected U.S. consumer inflation data hinted that the Federal Reserve could still move toward rate cuts later this year. While tariff-related price increases remain a concern, the latest figures provided a measure of comfort for investors worried about runaway inflation.
The positive sentiment also followed a series of diplomatic breakthroughs. After a trade agreement between the U.S. and the U.K. last week, tensions eased further when Washington and Beijing agreed on Monday to suspend their trade war for 90 days.
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The deal includes slashing mutual tariffs and halting other punitive measures as both sides negotiate a more permanent economic framework.
Currency markets reflected the ongoing uncertainty. The U.S. dollar fell 0.4% against the yen to 146.88 and remained mostly flat at $1.1189 against the euro. The dollar index stayed steady after a notable 0.8% drop the day before.
Japan’s Nikkei fell 0.4%, trimming gains from the previous session, while U.S. crude oil edged down 0.5% to $63.35 a barrel, staying near a two-week high. Spot gold slipped slightly to $3,222.08 per ounce.
Although the worst-case scenarios around the trade war appear to be priced out for now, markets remain sensitive to geopolitical shifts and policy developments. For investors, all eyes will stay fixed on upcoming earnings, inflation data, and the evolving trade negotiations.
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