Fed’s Next Move in Focus as US Inflation Data Stirs Asia Markets

On Wednesday, Asia markets were completely mixed as a rather bland US inflation report lessened all the hopes for an early interest rate cut. 

Later that day, all the spotlight was on the Federal Reserve’s policy statement. The S&P 500 has reached the highest point in three years, along with the other two Wall Street indexes that ended the day higher. 

This particular positive momentum resulted from the situation where consumer prices increased only to a small extent last month. It showed that the Federal Reserve’s efforts to deal with inflation are progressing.

Nonetheless, all information concerning the core prices stayed extremely high. Many traders were disappointed, showing the Fed’s ongoing struggle to meet its inflation goals.

Most stock traders now think the Federal Reserve will cut rates next year. Some strongly believe the cuts will be smaller than expected and might come later than previously thought.

Chris Larking from E*Trade by Morgan Stanley stated that the inflation reduction for last year’s peaks was one thing. However achieving the target by the Federal Reserve of 2% is a completely other thing. 

Slowing Economy and Easing Inflation Suggest Delayed Rate Cuts

The current trends still manage to express a slow-moving economy and ease inflation. They suggest that, even though lower interest rates are long-awaited during the present year, they won’t materialise later than some analysts expect. 

In Asia stock markets today, the mixed performance reflects huge economic uncertainties. The Federal Reserve’s two-day meeting concludes later Wednesday. 

The great number of individuals predict the Fed keeping present rates. However, the statement and the comments by Chair Jerome Powell will be scrutinised for insights into 2024 plans. Besides that, the Fed would also reveal its economic forecasts and the “dot plot” for potential rate hikes.

All the recent figures have been showing a rather slowing economy and cooling labour, even though there isn’t eisn’t for sparking recession concerns. 

Despite the fact that there’s positive data, Federal officials along with Powell have stated that the final decisions would probably be driven by data. He added that further rate hikes would be possible if needed. 

At AllianzGI, Frank Dixmier stated the Fed would probably wait for more signs of a cooling job market prior to cutting rates. He also mentioned that he’d tell the markets to be patient.

Asia Stocks Mixed; Chinese Economic Meeting Disappoints

As stated above, we have witnessed a mixed performance in Asia stock markets. Cities such as Sydney, Tokyo, Wellington, Manila, and Taipei saw gains. 

Conversely, Hong Kong, Shanghai, Seoul, Bangkok, Mumbai and Jakarta experienced huge losses. Only Singapore remained stable at the moment.

After a two-day economic meeting in Beijing, Chinese traders were the ones who were let down by the final results. Leaders from these mentioned Asian countries emphasised their great support for the property sector that’s been struggling. However, they also expressed frustration due to the absence of new measures.

Hao Hong from Grow Investment Group said the particular conference had no further surprises. Hong stated that the emphasis on security, risk, and high-quality development indicated that quality growth is more important than rapid growth.

Japan and South Korea Decline, China and Hong Kong Show Gains

Japan’s Nikkei 225 dropped 1.77%, closing at 37,388.62, while the broader Topix index fell 1.4% to end at 2,641.14, breaking a five-day winning streak. This decline followed a 1.7% year-on-year decrease in core machinery orders for June, contrary to economists’ expectations of a 1.8% increase.

Additionally, Reuters reported that Japan’s national and Tokyo governments are aiming for a 700 billion yen ($4.7 billion) valuation for Tokyo Metro, which is set for a potential IPO by late October, the largest in Japan since 2018. South Korea’s Kospi slipped 0.85% to close at 2,674.36, while the Kosdaq fell 1.13% to finish at 777.47.

Conversely, Hong Kong’s Hang Seng index rose 0.81%, and the mainland CSI 300 increased by 0.34%, marking a third consecutive day of gains. Australia’s S&P/ASX 200 inched up 0.12% to close at 7,980.4.

Prices continued to drop in the Asian stock market

In Asian stock market news today, oil prices continued to drop. This extends Tuesday’s four per cent loss, driven by rising US production and weak demand from China. Since June, West Texas Intermediate and Brent crude are at their lowest levels.

Keep an eye on the biggest stock losers today and mutual fund trends for real-time updates and the latest data for the information purposes.

Crucial Figures

Asian Stock Market Today: Key Figures as of 0700 GMT

Tokyo (Nikkei 225): Up 0.3% at 32,926.35 (close)
New York (Dow): Up 0.35% at 36,577.94 (close)
London (FTSE 100): Flat at 7,542.77 (close)
Hong Kong (Hang Seng Index): Down 1.2% at 16,186.40
Shanghai (Composite): Down 1.2% at 2,968.76 (close)
Dollar/Yen: Up at 145.77 yen from 145.49 yen
Euro/Dollar: Down at $1.0783 from $1.0800
West Texas Intermediate: Down 0.6% at $68.22 per barrel
Pound/Dollar: Down at $1.2548 from $1.2567
Euro/Pound: Over at 85.93 pence from 85.91 pence
Brent North Sea Crude: Down 0.6% at $72.80 per barrel

Federal officials and Powell will likely make decisions based on data, despite some positive information.

As the Federal Reserve’s policy meeting concludes, markets are focused on future interest rate decisions. Despite some progress in US inflation data, the Fed’s struggle to meet its targets continues. With mixed performances across Asian stock markets and no new measures from China, uncertainty remains high. Investors should watch for Chair Powell’s comments and the Fed’s updated economic forecasts for clues on future rate adjustments.

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