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Monday, September 26, 2022

The attention shifts to U.S. inflation figures and the future for the Federal Reserve, which causes turbulence in Asian stock markets

The financial markets were concerned about ongoing global cost pressures, which led to a decline in Asian share prices on Tuesday. Investors are now turning their attention this week to inflation data from the United States and the possibility of further aggressive rate hikes from the Federal Reserve.

The surprisingly good figures on employment that were released in the United States on Friday have elevated the stakes for the report on consumer prices in the United States for the month of July, which is coming on Wednesday. This is particularly true for the policy outlook of the Federal Reserve.

The necessity of decreasing inflation as a means of underpinning the rise in domestic demand and sustained employment creation will be made abundantly apparent during the Jackson Hole symposium that will take place from August 25-27.

The most comprehensive index that MSCI maintains of Asia-Pacific equities that are not listed in Japan opened for trading in Asia with a loss of 0.2 percent. The index is now up by 0.5 percent since the beginning of this month. U.S. stock futures increased 0.07 percent .

The Nikkei fell by 0.81 percent, while the Australian share market remained unchanged.

In the early going of trading in China, the blue-chip CSI300 index was down 0.31 percent. The Hang Seng index in Hong Kong began the day with a loss of 0.12 percent.

A revenue warning from chipmaker Nvidia reminded investors of a sluggish economy in the United States, which contributed to Wall Street’s mostly flat closing price on Monday. The blockbuster jobs data from the previous week had strengthened expectations that the Federal Reserve will crack down on inflation.

Investors are now waiting for data on consumer prices to be released on Wednesday in order to judge if the Federal Reserve would loosen up a little in its battle against inflation and offer a stronger footing for the economic expansion.

There were some hopeful indications for the Fed on the pricing front, with a poll conducted by the New York Fed on Monday revealing that consumers’ inflation expectations declined significantly in the month of July.

The value of the Dow Jones Industrial Average went up by 0.09 percent, while the value of the S&P 500 went down by 0.12 percent and the value of the Nasdaq Composite went down by 0.1 percent.

In the midst of days of Chinese military drills near the island, investors looked to bonds as a safe haven owing to the concern caused by Beijing’s threatening rhetoric directed against Taiwan.

The yield on the benchmark 10-year Treasury note reached 2.7517 percent, which is an increase from its U.S. closing value of 2.763 percent on Monday. The yield on the two-year bond, which increases as traders anticipate rising Fed fund rates, reached 3.2115 percent, which is higher than the closing rate in the United States, which was 3.216 percent.

The dollar index, which measures the value of the US dollar in relation to a selection of currencies used by other key trade partners, reached a new high of 106.37 on Tuesday.

After having their worst week since April, oil prices extended their current downward trend after suffering their worst week since April due to concerns about slowing global demand as central banks continued to tighten monetary policy.

U.S. crude lost 0.19 percent to $90.59 a barrel. Brent oil slipped to $96.48 per barrel.

Even though gold had managed to recover from the lows it struck on Friday and was being traded at $1788.7731 per ounce, the strengthening of the dollar was a negative development for the precious metal.

David Faber
I am a Business Journalist of The National Era
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