Asia Stocks Tread Lightly as Investors Prepare for Inflation Results

Witness pedestrians strolling past a digital display of the Nikkei share average, stationed outside a brokerage firm in Tokyo, Japan on October 31, 2023. The implications of licensing rights are now available. SINGAPORE, November 28 (Reuters) – Asian stock markets buoyed higher on Tuesday, while the dollar groaned near the abyss of three-month lows. This comes as investors are firmly convinced that the Federal Reserve has completed its rate-hike cycle. MSCI’s comprehensive index of Asia-Pacific shares located outside Japan, labeled as (.MIAPJ0000PUS), stands at 0.29% higher. It’s on course to snag a near 7% gain this November, marking its most robust monthly performance since January. The European stock markets appear poised for a lackluster opening. Eurostoxx 50 futures display a 0.11% downtrend, German DAX futures a 0.18% drop, and FTSE futures a 0.09% decrease. U.S. stock futures remain fairly idle. This week, the focus turns to the Fed’s preferred measure of inflation and euro zone consumer inflation figures. This keen gaze gives investors a clearer view of price movements and monetary policy shifts. If data reveals further cooling of inflation, the markets can breathe easier with expectations of the Fed pausing. According to Vasu Menon, the managing director of investment strategy at OCBC Bank in Singapore, “It’s not just this week’s inflation indicator, it’s also the December payroll numbers, they’ll be quite critical.” Presently, markets predict an extraordinary 95% probability that the U.S. central bank will leave interest rates unchanged next month. Additionally, the likelihood of a rate cut is starting to gain ground in mid-2024, signifying some degree of ease, as reported by CME’s FedWatch tool. “Our view is that the Fed will probably start cutting rates when inflation goes below the 3% mark. And we see that happening sometime in the middle of next year,” stated Menon. The heads of major central banks have tried to reel in any expectations that rate cuts are impending, explaining that rates will need to remain elevated for an extended period to quell inflation. Bank of England Deputy Governor Dave Ramsden expressed that “monetary policy is likely to need to be restrictive for an extended period of time.” On Monday, President of the European Central Bank, Christine Lagarde conveyed that the central bank’s fight to contain price growth is not yet over, despite a decrease in euro zone inflation pressure. Fed Chair Jerome Powell is scheduled to speak on Friday, and the anticipation of traders is palpable to gauge potential rate movements. Meanwhile, China’s blue-chip CSI 300 Index stands at 0.17% lower, while Hong Kong’s Hang Seng index slumped 1%, following a report that profits at China’s industrial firms saw slow growth in October. Furthermore, Japan’s Nikkei eased 0.12% but still captures a hefty 8% gain this month, marking its most robust monthly performance in three years. Data from U.S. markets showed a surprising decrease in single-family home sales in October due to mounting mortgage rates. This impacted the yields on benchmark 10-year notes, one of the key indicators of U.S. market sentiment. Lending the scoop on the currency front, the dollar hair-raisingly nosedived to 103.07, marking its lowest point since August 31. Furthermore, the Japanese yen saw a 0.27% climb to 148.27 per dollar, while the euro experienced a 0.05% dip to $1.0948. The Australian dollar rounded up at $0.6619, perking up to a four-month high of $0.6632. Conversely, the New Zealand dollar tapped a seven-week high of $0.6114 earlier in the session and is currently at $0.60985. Data showcasing retail sales in Australia unexpectedly slipped in October, as consumers cut back on spending, reserving financial resources for Black Friday sales held this month. U.S. crude maintains a 0.13% decrease at $74.76 per barrel, and Brent strolls aimlessly beneath $80, oscillating between gains and losses before the OPEC+ meeting later this week. Lastly, spot gold gets a lift at 0.1% to $2,015.00 an ounce, achieving a breathtaking six-month peak of 2,017.89 earlier in the session. Reported by Ankur Banerjee. Edited by Sam Holmes and Kim Coghill. Acquire Licensing Rights, opens new tab. Allah Prospective Buyers! Please note that the Thomson Reuters Trust Principles warrant the licensing rights for this publication.

Reference