Stocks and bonds were steady on Wednesday, but the dollar fell ahead of U.S. inflation data that might indicate the Fed’s rate-hiking appetite.
Investors were hesitant to move on Wednesday ahead of the publication of US inflation data, which might signal the Federal Reserve’s desire for more aggressive rate rises. As a result, stock markets around Asia saw declines, but the dollar maintained its stability.
The Consumer Price Index (CPI) data will be announced at 12:30 GMT, and the markets will be monitoring for evidence that inflation fell in July despite the surprisingly good employment figures that were reported in the United States last week.
Currently, the market is pricing in a 69.5% likelihood of a rate rise of 75 bps at the Fed’s next meeting, known as FED WATCH. Economists surveyed by Reuters anticipate that the Consumer Price Index (CPI) will show year-on-year headline inflation USCPNY=ECI of 8.7%, which is much higher than the Fed’s objective of 2% but lower than the record-breaking 9.1% seen last month.
The most comprehensive index of Asia-Pacific equities that MSCI tracks closed with a loss of 1.31%, while Japan’s Nikkei extended its losses from the previous day and finished with a loss of 0.65%.
The TAIEX in Taiwan was down 0.74%, while the KOSPI in South Korea was down 0.95%. Additionally, the AXJO in Australia was down 0.5%.
The Consumer Price Index (CPI) data will be announced at 12:30 GMT, and the markets will be monitoring for evidence that inflation fell in July despite the surprisingly good employment figures that were reported in the United States last week.
The KOSPI.KS11 index in South Korea was down 0.95%, the AXJO.AXJO index in Australia was down 0.5%, and the TAIEX.TWII index in Taiwan was down 0.74%.
The futures market for European stocks indicated more losses before the markets opened. Futures contracts for the FTSE 100 (FFlc1) and the Euro Stoxx 50 (STXEc1) were both tradings down by 0.38% and 0.31%, respectively.
According to David Chao, a global market strategist for Asia Pacific ex-Japan at Invesco, “I don’t believe that we are through the woods of the bear market yet — recession concerns loom, and I don’t think the Fed is done with its severe belt-tightening.”
The declines in Asian markets followed the trend seen on Wall Street, which saw all three main indexes finish Tuesday’s trading day in the red. The S&P 500 sank by 0.42%, while the Dow Jones Industrial Average fell by 0.18%, and the Nasdaq Composite lost 1.19% of its value.
