Stocks Extend Gains in Asia Amid Inflation Focus:
- Powell refrains from hints on Fed policy outlook before CPI
- Shares climb in Japan, Australia; Hong Kong futures rise
Equities climbed in Asia on Wednesday, extending an advance seen on Wall Street as traders bet that the upcoming US consumer price index will show further softening.
Equities opened higher in Japan, South Korea and Australia while futures contracts for Hong Kong rose. An index of US-listed Chinese stocks rallied as the S&P 500 moved back above its key 3,900 mark. US futures inched up in Asian trading.
Australian government bond yields and the nation’s currency held gains after inflation in the country accelerated, keeping pressure on the central bank to raise interest rates further.
More broadly, investors remained focused on the price outlook for the US. Federal Reserve Chair Jerome Powell refrained from commenting on the outlook for monetary policy at an event on Tuesday as traders look to Thursday’s inflation data for any signs of cooling.
Treasury yields trimmed the advance they made on Tuesday, with the rate on 10-year debt easing to around 3.6%. Any cooling of CPI figures in the US could help build the case for the Fed to slow its pace of rate hikes, even as some officials say it’s too early to declare victory over inflation.
A gauge of dollar strength was little changed near a seven-month low. The yen steadied in the middle of its range since late December and the offshore yuan was little changed around the strongest level versus the greenback since August.
JPMorgan Chase & Co.’s sales and trading desk expects Thursday’s inflation figures to come in cooler than forecast, helping stocks extend a bear-market rally. The bank’s chief Jamie Dimon told Fox Business that rate hikes might need to go beyond what’s currently expected.
While Powell didn’t directly comment on the Fed’s next steps at a forum in Stockholm, he did say that “restoring price stability when inflation is high can require measures that are not popular in the short term as we raise rates to slow the economy.” Fed Governor Michelle Bowman said the central bank has more work to do to curb inflation, noting that further tightening is needed.
Meanwhile in Asian markets, much focus is on China and its reopening from Covid curbs. The MSCI Asia Pacific Index slipped slightly on Tuesday after climbing into a bull market on Monday amid hopes for economic growth and weakness in the dollar.
Yet China’s reopening has also triggered a surge of infections and tighter requirements for its citizens to enter many countries. Beijing has begun to hit back against this, suspending some visas for South Korea and Japan.