Asian Stocks Up Before U.S. Inflation Data: Asian stocks have significantly risen with the climb of the world’s largest technology companies,
leading to new global stock market highs ahead of the anticipated U.S. inflation data.
Content
Performance of Technology Companies
Interest Rate Cut Expectations
Implications of China’s Decision
Rise in Japan and Australia
Stocks in Japan and Australia rose, reflecting the bullish wave experienced on Wall Street on Wednesday.
The S&P 500 and Nasdaq 100 indices increased by more than 1%, with global stock indices reaching new record levels.
The S&P 500 index has risen in the last seven sessions, marking its longest winning streak since November.
Performance of Technology Companies
The surge in U.S. stocks accelerated in the final minutes of trading, focused on companies like Nvidia and Apple.
The iPhone manufacturer announced plans to ship 10% more new devices this year after a challenging 2023.
Taiwan Semiconductor Manufacturing, the sole supplier of the most advanced chips for Nvidia and Apple,
reported that its second-quarter sales grew at the fastest pace since 2022.
Calm Markets Amid Data Flow
Mark Hackett from Nationwide stated that markets “remain remarkably calm despite the data flow this week,
including Fed Chairman Powell’s testimony before Congress over the past two days,
the upcoming consumer and producer price index reports, and the beginning of the earnings season.”
U.S. Inflation Trend
The U.S. core consumer price index, which excludes food and energy costs and is seen as a preferred inflation measure,
is expected to rise by 0.2% in June for the second consecutive month.
This would represent the smallest back-to-back increase since August,
a more acceptable pace for Federal Reserve officials.
Anna Wong from Bloomberg Economics said,
“The June CPI report appears to be another report that can be described as very good,”
adding that “it should bolster the FOMC’s confidence regarding the inflation path,
paving the way for the Fed to start cutting rates in September.”
Interest Rate Cut Expectations
Swap contracts are pricing in two rate cuts by the Federal Reserve in 2024,
with the first cut likely in September.
The U.S. dollar strength index remained largely unchanged today
despite gains in the yen, Australian dollar, and New Zealand dollar against it.
Implications of China’s Decision
In Asia, investors will examine the impact of the Chinese Securities Regulatory Commission’s decision
to tighten short-selling rules and high-frequency trading using
advanced algorithms in an attempt to eliminate improper arbitrage and maintain market stability.
Jerome Powell’s Statements
As Wall Street prepares for the consumer price index release, Jerome Powell
told Congress that the Federal Reserve does not need a sub-2% inflation rate
to begin cutting rates and that officials still have more work.
Powell noted that the labor market has “slowed significantly.”
Powell discussed “good ways to go” in reducing the balance sheet,
affirming that the commercial real estate market does not threaten financial stability.
Krishna Guha’s Perspective
Krishna Guha from Evercore believes that “the main takeaway from Powell’s testimony is that the
Fed’s risk assessment is changing in a way that, if supported and sustained by data,
will lead to a rate cut in September.”
Economic Reports in Asia
Today, it will be packed with economic reports from Asia, including Thailand’s consumer confidence index,
Japan’s machinery orders, monetary policy decisions in Malaysia and South Korea,
and new figures on the money supply and lending in China.
Australian and New Zealand bonds showed little change in early trading while oil prices rose.
Gold prices remained largely stable after climbing for the second consecutive session yesterday.
Asian Stocks Up Before U.S. Inflation Data