Asian Markets Track Wall St Records After US Inflation Data
Umer Jamshaid Published May 16, 2024 | 06:24 PM
Asian equities rallied Thursday after US data showed inflation cooled last month, fuelling speculation that the Federal Reserve will cut interest rates twice this year
Hong Kong, (UrduPoint / Pakistan Point News - 16th May, 2024) Asian equities rallied Thursday after US data showed inflation cooled last month, fuelling speculation that the Federal Reserve will cut interest rates twice this year.
The news sent all three main indexes on Wall Street to record highs, with confidence given an extra boost by figures showing retail sales well below expectations, suggesting consumers were taking a step back.
The 3.4 percent clip in April consumer prices was in line with forecasts but down from March and capped a run of three straight months above estimates that forced investors to reel in their rate cut hopes.
The Fed is now tipped to reduce borrowing costs twice before the end of the year, an increase on the one previously predicted -- though a lot fewer than the six estimated in January.
"We see the April print as consistent with a direction of travel for inflation dynamics that -- in the context of moderation in the real economy -- can yield a September cut followed by a second in December," Evercore's Krishna Guha said.
Adding to the upbeat mood was a report showing retail sales were flat in April.
"The market likes it," said Gary Pzegeo of CIBC Private Wealth US.
"The news on core inflation was better than expected. Retail sales also showed some deceleration from the previously hot consumer sector. Taken together, this supports a Fed rate cut in the fall."
Taylor Nugent at National Australia Bank added: "It's a world more aligned with the Fed's characterisation that disinflation remains in train even if it is taking a bit longer than earlier hoped.
"It should help quieten, at least for now, any concern the Fed's confidence rates will prove sufficiently restrictive."
He added that the next move "is likely to be down".
Still, Minneapolis Fed boss Neel Kashkari was keen to move cautiously as he questioned how much of an impact monetary policy was having on inflation.
"That's an unknown -- we don't know for sure," he said.
"And that tells me we probably need to sit here for a while longer until we figure out where underlying inflation is headed before we jump to any conclusions.
"
His remarks came a day after Fed chief Jerome Powell said the battle against prices was proving tougher than expected and indicated rates could remain elevated for some time.
Investors, however, took the latest data as a reason to press on with a market rally, which on Wednesday saw the Dow, S&P 500 and Nasdaq end at all-time highs in New York.
And Asia extended the advances, with Hong Kong returning from a midweek break on a strong note, while Shanghai, Sydney, Singapore, Seoul, Wellington, Taipei, Manila, Mumbai, Bangkok and Jakarta were also well in the green.
Tokyo advanced even after data showed Japan's economy shrank more than expected in the first three months of the year.
London and Paris skidded lower at the open while Frankfurt edged up.
Expectations for cuts by the Bank of England and European Central Bank helped all three markets to their own records on Wednesday.
The dollar held losses against its main peers as the prospect of lower rates made the greenback less attractive to foreign investors, while the cheaper greenback also pushed gold back towards $2,400 for the first time since last month.
- Key figures around 0715 GMT -
Tokyo - Nikkei 225: UP 1.4 percent at 38,920.26 (close)
Hong Kong - Hang Seng Index: UP 1.6 percent at 19,369.51
Shanghai - Composite: UP 0.1 percent at 3,122.40 (close)
London - FTSE 100: DOWN 0.1 percent at 8,440.51
Dollar/yen: DOWN at 154.28 yen from 154.83 yen
Euro/dollar: DOWN at $1.0875 from $1.0886 on Wednesday
Pound/dollar: DOWN at $1.2675 from $1.2681
Euro/pound: UP at 85.80 from 85.77 pence
West Texas Intermediate: UP 0.6 percent at $79.06 per barrel
Brent North Sea Crude: UP 0.5 percent at $83.17 per barrel
New York - Dow: UP 0.9 percent at 39,908.00 (close)
Related Topics
Recent Stories
All resources to be used for welfare of Attock people: Governor
Markets mixed as US jobs data tempered by economy worries
Chairman DDMA, DC chairs Meeting on Desilting of Nullahs, Sewerage Lines
PML-N leadership believes in democratic norms: Sanaullah
Tennis: French Open results - 1st update
Andreeva shocks ailing Sabalenka, faces Paolini in French Open semis
Rohit plays down injury scare after India rout Ireland in T20 World Cup
Nature reborn a year after Ukraine dam blast
Over 9000 cusec water released in 2 canals after 94% sowing target achieved in M ..
Sabalenka eyes French Open semis, Rybakina beaten by Paolini
World will likely temporarily pass 1.5C climate limit by 2028: UN
IG emphasizes IT’s importance in NHMP modernizing
More Stories From Business
-
Markets mixed as US jobs data tempered by economy worries
7 hours ago -
Canada central bank cuts key lending rate, signals more ahead
7 hours ago -
IHC upholds SECP's decision of imposing penalties on Shaukat Marwat Group
7 hours ago -
No policy change in net metering policy
7 hours ago -
High prices slash cigarette consumption by over 11 billion sticks
9 hours ago -
Zhao Shiren meets Ch. Shujaat Hussain, Ch. Shafay
9 hours ago
-
PBS organizes 3rd awareness workshop on agriculture census
9 hours ago -
FPCCI demands cut in mark-up, power tariff for industrialization
9 hours ago -
Shaza discusses telecom infrastructure, innovation, ICT solutions
9 hours ago -
Pak-China Business forum sign MoUs to boost bilateral trade: Aleem Khan
9 hours ago -
Pakistan can achieve its objectives through 'soft-core' diplomacy: FCCI President
10 hours ago -
European stocks rise before rate cut, Wall Street mixed
10 hours ago