South Korean equity markets posted their strongest session in months, with the benchmark Kospi index surging more than 8% on Tuesday.
The rally was driven by a lower-than-expected US inflation report, which rekindled hopes for a more dovish Federal Reserve stance and provided immediate tailwinds for global risk assets.
The small-cap Kosdaq index also climbed 4%, while Japan’s Nikkei joined the broad-based rally, signaling that the US data print was the primary catalyst for the regional move.
The Kospi’s 6.3% opening gain marked a dramatic reversal in sentiment for Asian equities, which had been under pressure from persistent domestic inflation concerns.
The small-cap Kosdaq index also climbed 4%, while Japan’s Nikkei joined the broad-based rally, signaling that the US data print was the primary catalyst for the regional move.
The market reaction stands in stark contrast to recent domestic data, where South Korea’s consumer price index accelerated to 3.2% year-on-year in June, marking the highest inflation rate in 30 months.
That domestic pressure had previously weighed on investor sentiment, but the external catalyst from Washington appeared to override local macroeconomic headwinds in the short term.