It was a slow day on Wall Street, with Asian stocks mostly higher on Wednesday as investors focused intently on the release of key U.S. inflation data that could have a big impact on the interest rate outlook.
Markets reacted positively to last week’s big jobs report showing continued strength in the economy, but on the exchange the Fed missed out on consumer price increases for the third time in a row, leading to lower borrowing costs. There is a sense of tension that the reductions may be forced to be postponed.
Andrew Brenner of NatAlliance Securities said the consumer price index “is an important number this week.” “The concern is that the CPI continues to be a thorn in the Fed’s side.”
“The positioning is very bearish,” he added.
Investors are now expecting as many as three rate cuts this year, down from six at the start of the year, with some considering zero, but some say the rate cuts are the price to pay for economic health and strong earnings.
Atlanta Fed President Rafael Bostic offered a pragmatic opinion Tuesday when asked about the bank’s plans.
He reiterated his view that there would be a one-year cut this year, but said he was prepared to change his mind once the data became available.
“I think the risks are balanced, and given that the U.S. economy is so strong and strong and resilient, we’ve ruled out that possibility,” he said after being asked about the possibility of it lasting all year. I can’t do that.” It may be necessary to postpone the rate cut further. ”
But he added: “If we start to receive other signals that suggest there is significant pain ahead on the labor market side, I would be open to changing our policy stance and perhaps making policy cuts sooner.” He also said.
Still, Evercore’s Krishna Guha remains optimistic ahead of the CPI data, adding: “We’re likely to have enough data to beat expectations.”
On Wall Street, the S&P 500 and Nasdaq posted modest gains, but the Dow Jones Industrial Average fell slightly.
In early Asian trade, Hong Kong rose more than 1%, Sydney, Taipei and Wellington also rose, but Shanghai fell slightly.
Tokyo also fell as the strong yen weighed on exporters. The currency strengthened against the dollar after Bank of Japan Governor Kazuo Ueda’s less than dovish comments.
Exchange rates have been in the spotlight this week as the yen weakened toward 152 yen to the dollar, which many observers believe triggered authorities to intervene to support the Japanese currency.
The central bank raised interest rates last month for the first time since 2007, as inflation remained well above officials’ targets and speculation increased about when another rate hike would occur.
“If the underlying price trend rises in line with our forecast, we will need to consider reducing the degree of monetary easing,” Ueda told lawmakers on Tuesday.
“This will depend on the data coming in, so we will carefully consider it at each policy meeting,” he said.
– Main figures around 0230 GMT –
Tokyo – Nikkei Stock Average: down 0.3% to 39,666.24 (break)
Hong Kong Hang Seng Index: 17,045.88, up 1.3%
Shanghai – Overall: down 0.1% to 3,044.78
Dollar/JPY: down to 151.72 yen from 151.76 yen on Tuesday
EUR/USD: fell from $1.0860 to $1.0856
GBP/USD: down from $1.2678 to $1.2676
EUR/GBP: down from 85.64p to 85.63p
West Texas Intermediate: up 0.1% to $85.30 per barrel
Brent crude: up 0.1% to $89.49 per barrel
New York – Dow: flat 38,883.67 (closing price)
London – FTSE 100: down 0.1% to 7,934.79 (close)
–Bloomberg News contributed to this article —
Dan/Kururu
