Asian stocks gain ahead of US inflation report
BEIJING Wall Street futures rose Tuesday ahead of data traders hoping to show that the surging U.S. inflation has eased in August, decreasing pressure for further interest rate increases.
London opened higher. Shanghai, Tokyo, and Hong Kong all gained. Oil prices rose by more $1 per barrel.
Investors waited for U.S. government data that they hope will show that inflation peaked in June at 9.1%, a level that was unprecedented in four decades. Inflation has since fallen further to 8.5% in July, after falling to a record high in June. A decline could help the Federal Reserve to avoid raising interest rates to a level that could tip the U.S. into recession. Oanda’s Edward Moya stated that the report “will likely demonstrate pricing pressure relief, but will not change Fed from maintaining an aggressive position.”
In early trading, the FTSE 100 in London gained 0.2% to 7,485. 89 and the DAX in Frankfurt added 0.3% to 13,443.76. The CAC 40 in Paris rose 0.6% to 6,369.74.
On Wall Street the future of the benchmark S&P 500 Index was up 0.5%. The Dow Jones Industrial Average grew 0.4%.
On Monday, the S&P 500 Index rose 1.1%. The Dow gained 0.7%, while the Nasdaq composite gained 1.3%.
In Asia, the Shanghai Composite Index gained less than 0.1% to 3,263. 79 and the Nikkei 225 in Tokyo added 0.3% to 28,614.63. The Hang Seng in Hong Kong shed 0.2% to 19,326.86.
The Kospi in Seoul soared 2.7% to 2,449. 54 and Sydney’s S&P-ASX 200 rose 0.7% to 7,009.70.
India’s Sensex gained 0.8% to 60,620.01. New Zealand’s economy declined, while Southeast Asian markets grew.
Fed officials affirmed their support for significant rate hikes and to keep borrowing prices elevated long enough to ensure inflation is under control.
On Wednesday, the U.S. government will report August inflation at wholesale level.
Investors believe that falling inflation pressures will cause the Fed to ease off. Similar hopes were crushed when Jerome Powell, the Fed chair, stated in August that rates would remain high.
Surveys indicate that traders expect the Fed’s fifth rate hike this year, and to increase them by 0. 75 percentage points, three times its usual margin. The U.S. central banks is expected to keep rates stable through the first half 2023..
In energy markets, the benchmark U.S. crude gained $1. 10 to $88. 88 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 99 cents to $87. 78 on Monday. Brent crude, which is the international oil trading price, increased $1. 15 to $95. 15 per barrel in London. It gained $1. 16 the previous session to $94.
The dollar eased to 142. 35 yen from Monday’s 142. 73 yen. The euro rose to $1. 0143 from $1.0117.
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