Asian markets rose on Wednesday and the dollar struggled as investors welcomed softer-than-expected U.S. inflation data that may allow the Federal Reserve to slow interest rate hikes.
The reading provided some much-needed Christmas cheer on trading floors and came days before the US central bank’s final policy decision of the year, which will be considered for policy advice. for 2023.
There is also focus on China as it resumes the strict zero-Covid strategy that has crippled the world’s second-largest economy, even as fears of a further outbreak of the virus are causing anxiety among traders. .
Wall Street’s three major indexes ended in positive territory on Tuesday in response to data showing consumer prices rose 7.1 percent last month, below forecasts and at the earliest from December 2021.
The reading followed a decline in October and fueled hopes that inflation had picked up, after several months of Fed rate hikes.
“Last month’s positive shock came with the caveat that it was ‘just a month away’ but November’s numbers add more weight to the interpretation that appears in the data the long-awaited slowdown in goods,” said National Australia Bank’s Taylor Nugent. .
Asian markets tracked Wall Street higher, although gains were limited ahead of the Fed meeting.
Hong Kong, Tokyo, Shanghai, Sydney, Seoul, Singapore, Taipei, Manila and Jakarta all stood up.
And the dollar pared losses suffered on Tuesday in response to the inflation report, with the yen, euro and pound the main gainers.
While the Fed is expected to increase lending rates by 50 basis points on Wednesday – after four consecutive hikes of 75 basis points – the post-meeting announcement and comments from Chairman Jerome Powell will be the main focus. the seller.
And while slower inflation has been welcomed, there is growing concern among investors that the U.S. economy will slip into recession next year as interest rates continue to rise. interest rates until prices are controlled and within the bank’s target of around two percent.
Silvia Dall’Angelo, of Federated Hermes, said that the monetary policymakers will slow down the increase so that they can “assess the impact on the real economy from the major consolidation that happened since March.
“However, the Fed will emphasize that its mission in the fight (against) inflation is far from over, and there will be more hikes in the coming months,” he added.
“Our expectation is that even if inflation eases in 2023, it will remain above target, which will prevent the Fed from tapering next year.”
Oil prices fell slightly on the back of a weaker dollar, although Brent held above $80.
Tokyo – Nikkei 225: UP 0.7 percent at 28,141.41 (break)
Hong Kong – Hang Seng Index: UP 0.3 percent at 19,662.40
Shanghai – Composite: UP 0.1 percent at 3,178.01
Euro/dollar: down to $1.0633 from $1.0635 on Tuesday
Dollar/yen: down to 135.44 yen from 135.59 yen
Pound/dollar: down to $1.2353 from $1.2366
Euro/pound: UP at 86.08 pence from 85.96 pence
West Texas Intermediate: down 0.5 percent at $75.00 a barrel
Brent North Sea Crude: down 0.6 percent at $80.18 a barrel
New York – Dow: UP 0.3% at 34,108.64 (close)
London – FTSE 100: UP 0.8 percent at 7,502.89 (close)