Asian equities rose Thursday after US inflation slid to a two-year low, easing pressure on global markets from rising interest rates in the world’s biggest economy.

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Stocks opened higher in Australia and South Korea. Japanese shares were mixed as the Nikkei 225 gauge showed a small gain while the broader Topix measure inched down.

The relative underperformance in Tokyo in part reflected the drag from the recent rebound of the yen. Sony Group Corp. shares shone, climbing as much as 3.4 percent after Goldman Sachs Group Inc. upgraded its recommendation on the shares to buy from neutral.

Futures for benchmark in Hong Kong pointed to strong opening gains and an index of US-listed Chinese stocks rallied more than 3%, setting the scene for Chinese equities to lead the region on Thursday.

Treasury yields were little changed in early trading in Asia. The yield on the two-year Treasury, which is more sensitive to imminent policy moves, had slid 13 basis points Wednesday after the inflation data.

Australia’s three-year sovereign bonds slumped more than 10 basis points. New Zealand’s government bond yields also fell.

A gauge of dollar strength inched lower after dropping almost 1% in the previous session to the lowest in more than a year. The yen strengthened to around 138.20 versus the greenback after its biggest advance in around four months.

The US consumer price index rose 3 percent in June from a year ago. The core measure — which economists view as the better indicator of underlying inflation — advanced just 4.8 percent, the lowest since 2021. While traders expect the Federal Reserve will still go ahead with one more rate hike this month, the likelihood of further increases appears to be receding.

The inflation data propelled the S&P 500 to finish at its highest since April 2022 Wednesday. The tech-heavy Nasdaq 100 outperformed with a jump of 1.2 percent.

Cooling inflation and slowing but non-recessionary growth should be moderately friendly for risk assets and conducive to lower volatility, according to strategists at Goldman Sachs.

“We also think that it should reduce multi-asset portfolio frustration as it lowers the risk of 60/40 drawdowns, though the upside for 60/40 portfolios is likely to still be limited due to relatively elevated risk appetite and the late-cycle environment,” the strategists, including Jenny Grimberg, wrote in a note.

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