Asian Equities Recover From Inflation-Driven Sell-Off
Asian stock markets staged a measured comeback on Friday, August 15, 2025, clawing back early losses triggered by stronger-than-expected U.S. wholesale inflation figures. The U.S. Producer Price Index for July rose 0.9% month-over-month, sharply exceeding consensus forecasts of 0.3%. The hotter reading rattled global risk sentiment in early trading, as it reduced the probability of a large Federal Reserve interest rate cut in September.
Initially, traders feared that the inflation surprise would solidify the Fed’s cautious stance, but sentiment improved as the session progressed. Investors shifted focus to regional fundamentals and corporate earnings, helping reverse the initial dip.
Japan Leads Regional Gains on Strong GDP Growth
Japan’s Nikkei 225 index surged 1.6% to close at a fresh multi-month high, fueled by a robust Q2 GDP print showing annualized growth of 1.0%—well above expectations. This growth was underpinned by solid household consumption and a rebound in manufacturing output, reinforcing optimism about Japan’s post-pandemic recovery.
The yen gained ground against the dollar, trading near 147.64 per USD, as traders priced in the possibility that the Bank of Japan might take a more proactive stance on policy normalization. Strong domestic data further bolstered investor appetite for Japanese equities, particularly in export-driven sectors such as electronics and automotive manufacturing.
Australia and China Join the Rebound
Australian equities also posted solid gains, with the ASX 200 climbing 0.7%. Miners and energy companies led the charge, benefiting from firm commodity prices and optimism over global demand. In China, the CSI 300 rose 0.8% after reports surfaced that Beijing is considering additional targeted stimulus measures, including credit easing for small businesses and infrastructure spending.
Market watchers noted that while China’s economic momentum remains patchy, the government’s willingness to introduce support measures is helping to stabilize investor confidence.
Commodities Hold Steady Amid Policy Uncertainty
Commodities were largely stable despite shifting monetary policy expectations. Brent crude eased slightly to $67 per barrel after hitting a one-week high, as traders balanced concerns over geopolitical tensions ahead of the Trump–Putin summit with the reality of persistent inflation in the U.S. Gold inched up 0.2% to $3,343.94 per ounce, benefiting from a softer U.S. dollar and modest safe-haven demand.
In cryptocurrencies, Bitcoin gained 0.8% to remain above the $120,000 mark, while Ethereum added 1.7%. The moves reflected a broader stabilization in risk assets after the prior day’s record-setting rally.
U.S. Fed Outlook Still in Focus
Despite the rebound in Asia, global markets remain sensitive to shifts in expectations for U.S. monetary policy. According to CME FedWatch data, traders are now pricing in a 92.1% probability of a 25-basis-point cut in September, down from earlier expectations of a larger 50-point move. Analysts caution that incoming economic data, particularly next week’s U.S. retail sales and employment reports, will be pivotal in shaping the Fed’s decision.
Investor Takeaway
Today’s rebound underscores the resilience of Asia-Pacific markets in the face of external inflation shocks. While the U.S. PPI surprise briefly unsettled sentiment, strong domestic data from Japan, positive earnings, and ongoing policy support in China provided enough momentum to lift regional indices. Traders, however, remain alert to the next round of global macroeconomic releases, which could quickly alter the rate-cut calculus.
