Inflation Data Expected To Boost Asian Stocks

(CTN News) – Asian equities experienced a slight Inflation increase on Tuesday, while the US dollar reached its lowest point in three months. Investors maintained their belief that the Federal Reserve had concluded its cycle of interest rate hikes and shifted their focus toward an important inflation report scheduled for later this week.

The MSCI’s comprehensive index of Asia-Pacific shares, excluding Japan, rose by 0.39%. It is poised to achieve a nearly 7% gain in November, marking its most robust monthly performance since January.

Meanwhile, Japan’s Nikkei index saw a slight decline of 0.20%. However, it has still managed to rise by 8% this month, positioning itself for its strongest monthly performance in three years.

Rodrigo Catril, senior FX strategist at National Australia Bank, highlighted the significant role of central bank policy in driving the improvement in risk appetite during November.

He pointed out that the evidence of easing inflationary pressures has reinforced the belief that many central banks have completed their tightening cycles. As a result, expectations of rate cuts for the upcoming year have been brought forward.

In line with this, market indicators suggest a 96.8% probability that the US central bank will maintain interest rates at their current level next month. Additionally, there is growing speculation of a potential rate cut in mid-2024, as indicated by CME’s FedWatch tool.

Investors will focus on the Federal Reserve’s preferred inflation gauge and eurozone consumer inflation data this week.

These reports will offer more insight into future inflation trends.

European Central Bank President Christine Lagarde emphasized the ongoing efforts to control price increases, citing strong wage growth and an uncertain economic outlook despite easing inflationary pressures.

Traders will closely analyze the remarks of Fed Chair Jerome Powell on Friday to assess the potential direction of interest rates.

Meanwhile, China’s blue-chip CSI 300 Index experienced a 0.23% decline, and Hong Kong’s Hang Seng index dropped by 0.70% following the release of data indicating slower profit growth for China’s industrial firms in October.

In the US, Monday’s data revealed a larger-than-anticipated decline in sales of new single-family homes in October, attributed to higher mortgage rates impacting affordability. However, the housing segment continues to be supported by a persistent shortage of existing properties in the market.

On Monday, the yield on benchmark 10-year notes slipped 9.6 basis points due to weaker-than-expected data, which had an impact on Treasury yields. However, in Asian hours, they were up 1.6 basis points at 4.404%.

The dollar index, which measures the greenback against a basket of currencies, fell to 103.11, its lowest since Aug. 31. Meanwhile, the Japanese yen strengthened 0.28% to 148.25 per dollar.

As for oil prices, they slightly increased on Tuesday after a sharp decline the previous day, as investors awaited this week’s OPEC+ meeting and expected curbs on supplies into next year.

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