Tokyo’s Nikkei 225 index surged past 38,000 points Wednesday, reaching a new record high, while South Korea’s Kospi also edged upwards, buoyed by optimism surrounding potential interest rate cuts by the U.S. Federal Reserve. The Nikkei closed up over 1 percent, extending gains from Tuesday, with the broader Topix index rising 0.72 percent, according to reports from multiple financial news outlets.
The positive momentum in Asian markets follows the release of U.S. Inflation data that met expectations, increasing speculation that the Federal Reserve may begin lowering interest rates as early as next month. The Dow Jones Industrial Average climbed 1.10 percent to 44,458.61 on Tuesday, while the S&P 500 added 1.13 percent to 6,445.76 and the Nasdaq Composite jumped 1.39 percent to 21,681.90. U.S. President Donald Trump publicly called for lower interest rates following the data release.
South Korea’s Kospi rose 1.07 percent, and the Kosdaq, focused on smaller companies, advanced 0.88 percent. Australia’s S&P/ASX 200 saw a more modest increase, edging up 0.29 percent. Hong Kong’s Hang Seng index futures indicated a higher opening compared to the previous close of 24,969.68.
The U.S. Consumer Price Index (CPI) increased 0.2 percent month-on-month in July, with the annual rate coming in slightly below estimates. In January 2026, the Consumer Price Index for All Urban Consumers rose 0.2 percent, seasonally adjusted, and 2.4 percent over the last 12 months. The index for all items less food and energy increased 0.3 percent in January, and 2.5 percent over the year.
Analysts are closely watching for further signals from the Federal Reserve regarding its monetary policy. Jerome Powell is scheduled to deliver a speech that investors will scrutinize for clues about the timing and extent of potential rate cuts. The markets are currently pricing in a significant probability of a rate cut at the next Federal Reserve meeting.
