Asian stocks waver ahead of US inflation data and central bank rate decisions.
After making gains early Tuesday, Asian stock markets fell as investors waited for U.S. Inflation data. Many hope that this will convince the Federal Reserve and other central bankers to stop pursuing aggressive interest rate increases.
MSCI’s broadest index Asia-Pacific shares outside Japan was at 0.10%, while Japan’s Nikkei shares were 0.335% higher and Australian shares were at 0.24% and 0.24% respectively. Seoul’s KOSPI index fell 0.10%.
China’s CSI300 Index and Shanghai Composite Index both fell 0.33% to 0.21%, respectively, as concerns about a rise in COVID-19 infection following the demise of key components of the zero-COVID government policy clouded the outlook.
— Reuters (@Reuters) December 13, 2022
A tourism-linked index rose more than 2% after Hong Kong relaxed COVID-19 restrictions on inbound travelers.
Investors’ primary focus was on U.S. inflation data, due out at 1330 GMT Tuesday. Core CPI inflation is expected to slow down from 6.3% to 6.1%, and headline inflation to drop to 7.3%.
Janet Yellen, Treasury Secretary, made a cautious statement on Sunday. She said she expects a significant slowdown in inflation in 2023 but that the U.S. economy remains vulnerable to shocks.
The Fed, European Central Bank, and Bank of England will all likely raise rates by 50 basis point (bps) later this week, rather than the 75 bps increases they did earlier in the year.
Deutsche Bank stated in a research note that “Given its very close proximity (of U.S. CPI numbers to the FOMC), it clearly has the potential to change tone of the message… but is highly unlikely for the headline 50 bps increase,”
The dollar index, which measures how the greenback compares to six major currencies, was flat at 95.01.
After jumping Monday due to supply jitters oil prices continued to rise. Brent crude futures rose 1.17% at $78.90 a bar and U.S. West Texas Intermediate crude crude was up 1.15% at $73.99 a bar.
Spot gold was at $1,781.50 an ounce while U.S. futures rose 0.01% to $1,792.5