Asian Stocks Rise as Soft US Inflation Eases Fed Rate Hike Concerns
Asian stocks experienced an uptick on Thursday following the release of US inflation data that aligned with forecasts, which tempered anticipations of imminent rate hikes by the Federal Reserve. Concurrently, oil prices stabilised around $80 a barrel as negotiations between Washington and Tehran continued to stall regarding the resolution of the Gulf conflict. MSCI’s broadest index of Asia-Pacific shares outside Japan experienced an increase of 0.97 percent, primarily driven by a notable surge of 4.4 percent in South Korean shares. Japan’s Nikkei experienced an increase of 1.86 percent, whereas S&P 500 E-minis saw a modest rise of 0.02 percent. US consumer prices rose by 0.1 percent in July, aligning with forecasts, according to data released on Wednesday. The modest uptick may undermine the case for a Federal Reserve interest rate hike in the upcoming month. Money markets are forecasting a 40 percent probability of a rate increase, a decline from the 54 percent observed a week prior, as reported by CME Group’s FedWatch.
With August CPI data set to be released prior to next month’s Federal Open Market Committee meeting and a moderate increase in crude oil futures since July, “both the Fed and markets will likely want to assess the data right up until just before the September FOMC,” stated Den Miki. Wall Street concluded the session with a mixed performance, as the Nasdaq Composite and the S&P 500 recorded modest gains, whereas the Dow Jones Industrial Average experienced a decline. Oil prices have moderated, yet they continue to hold at elevated levels in Asia. US crude declined by 0.83 percent, settling at $82.58 per barrel, while Brent experienced a decrease of 0.71 percent, reaching $88.35 per barrel. Iran and the US continue to be at an impasse regarding the pursuit of a lasting resolution to the conflict in the Gulf.
Efforts to reinstate a June interim agreement have yielded no progress, and there is currently no established timeline for its execution, according to a senior Iranian source. President Donald Trump asserted that the US possesses “total control” over the Strait of Hormuz, a statement that was promptly dismissed by Iran, which contended that the route continues to be obstructed. Against the yen, the dollar softened 0.06 per cent to 159.32, amid growing speculation that the Bank of Japan would hike interest rates next month, earlier than the previously expected December timeline. Those expectations were reinforced by Japan’s wholesale prices, which increased by 7.2 percent in July compared to a year earlier, underscoring the expansion of price pressures. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, remained unchanged at 99.93.
The yield on benchmark US 10-year notes increased by 0.62 basis points to 4.688 percent, up from 4.682 per cent at the close on Wednesday. Reserve Bank of Australia Assistant Governor Christopher Kent stated that the three cash rate increases earlier this year are achieving their intended effects and will, over time, deter spending. Kent remarked that it would require “some time for tighter monetary policy to have its full effect on economic activity and inflation.” The Australian dollar maintained a stable position against the greenback at $0.7062. Spot gold increased by 0.28 percent to $4,419.28 per ounce, while spot silver saw a rise of 0.3 percent to $65.50 per ounce.
