Asian shares rise on soft inflation bets

Australian shares opened higher and futures for Hong Kong and Japan climbed, while Australian and New Zealand bonds rose, echoed in US stocks and Treasuries. Most major currencies were little changed in early Asian trade after gauges of dollar strength edged partially lower on Wednesday.

Investors looked beyond the drumbeat of dodgy comments from Federal Reserve officials to focus on the upcoming Consumer Price Index — with the specter of a potentially miserable stretch of earnings and a recession. The technology sector, one of the worst-hit groups during the Fed’s tightening campaign, led gains in US stocks.

The CPI will be examined from top to bottom, with a larger focus on core inflation – which excludes food and energy and is seen as a better indicator than the headline measure. The projected 5.7% increase would be well above the Fed’s target, helping to clarify its intention to keep rates high for an extended period of time. But there will also be a moderation in year-on-year price rise.

B. “An in-line or softer-than-expected CPI could result in a rally, while a hotter number could easily tip the applecart,” said Arthur Hogan, chief market strategist at Riley Wealth. “Good news for the economy can become good news for the markets.”

Earlier, Asian markets weighed in on Chinese consumer prices and produce price data as they continued to weigh the prospects of China’s rebound from its Covid isolation.

The virus may have kept inflation in check last month, with consensus forecasts for CPI rising to 1.6% to 1.8% in November. Factory gate prices slide year over year from 1.3% to less than 0.1% as commodity costs rise.

Still, despite the recent rally that has made Chinese assets a top performer globally, many large foreign investors are wary of trusting the government in anticipation of a 2022 regulatory shock.

Fed Bank of Boston President Susan Collins said she is leaning toward supporting a quarter-point increase at the Fed’s next meeting, which ends on February 1. A smaller step would give officials more time to see how their actions are affecting the economy, he pointed out. new York Times.

Close followers of strategist Edward Yardeni, who see resilience in the US economy despite recession worries growing last year, remain optimistic on the lead in global financial assets – including US stocks.

“The outlook for the world economy is actually improving,” the founder of Yardeni Research Inc. told Bloomberg Television. US equities “fell lower on October 12th. That was the end of the bear market and we are back in a bull market.” Since then, the S&P 500 has jumped nearly 11%.

Meanwhile, Pacific Investment Management Co. says a recession could further challenge riskier assets like stocks, “With yields higher in 2022 and the prospect of an economic downturn in 2023, we look to investing in bonds.” Let’s continue to see a strong case. ,

The text of this story is published from a wire agency feed without any modification.