Inflation data that will provide a clue to how the Federal Reserve will raise interest rates.
MSCI’s broadest index of Asia Pacific shares outside Japan rose 0.8%, after falling to its lowest level since July 2020 the day before. Reuters reported that Japan’s Nikkei rose 0.3%.
European markets were also poised to open higher, with EUROSTOXX 50 futures up 0.7%. Nasdaq futures rose 0.8% and S&P 500 futures rose 0.4%.
Asia’s blue-chip stocks led gains, rising 2% with the help of Shanghai officials who said half the city has achieved “zero COVID” status, and US President Joe Biden said he is considering scrapping Trump-era tariffs on China as a way to lower US commodity prices. United.
But Carlos Casanova, UBP’s chief Asian economist, said that “the main factor for markets at the moment is inflation, inflation and inflation”.
“Indian inflation was higher this week, Chinese inflation is higher than expected today, and everyone is concerned about US inflation and the possibility of a recession in the US, which is rising with every rate hike,” he said.
Chinese data released earlier on Wednesday showed that consumer prices rose 2.1% from a year earlier, beating expectations and the fastest pace in five months, due in part to food prices.
Factory inflation, although higher than expectations, fell to its lowest level in one year.
US consumer price data, due at 1230 GMT, may give an indication of whether the Federal Reserve will raise interest rates more aggressively to combat inflation.
The Fed last week raised its target for bank-to-bank overnight lending by half a percentage point, and President Jerome Powell said two more such increases are possible at the US central bank’s upcoming policy meetings.
There was also market speculation that the Fed would need to enter a massive 75 basis point increase in one meeting.
The violent tightening pushed up US Treasury yields and boosted the dollar.
The dollar index, which measures the greenback against six major peers, settled at 103.79, not far from a high of 104.49 at the start of the week and the highest since December 2002.
“The dollar’s reaction to the CPI will be disproportionate in our view,” CBA analysts said in a note.
“A positive surprise would encourage markets to increase pricing for a 75 basis point increase in the money rate later in the year and support the dollar, while a negative surprise would keep pricing in 50 basis point increases in June and July and leave the dollar flat.”
Analysts expect the US consumer price index
They also expected an annual increase of 8.1%, 0.4 percentage point lower than the previous 8.5%, which was the highest reading since December 1981.
US Treasuries were also quiet ahead of the data. The benchmark 10-year bond yield was little changed at 2.9774%, having fallen from Monday’s three-year high.
On the front end of the curve, the US two-year yield, which often reflects the Fed’s interest rate expectations, was flat at 2.6228%.
Bitcoin is trading around $31,700, having made a slight recovery after falling below $30,000 on Tuesday for the first time since July 2021.
Oil bounced back from its lows the previous day as markets try to offset concerns that China’s non-spreading COVID policy will affect demand.
US crude rose 2.36 percent to $102.08 a barrel, after falling below $100 on Tuesday for the first time this month. Brent crude rose 2.34 percent to $104.85.
Spot gold settled at $1,838.7 an ounce.
MI