SINGAPORE- Asian stocks inched higher and the dollar held steady on Tuesday ahead of a key US inflation report that could help shape the Federal Reserve’s rates outlook and determine the timing of interest rate cuts.
Bitcoin remained strong after crossing $50,000 for the first time in over two years, thanks to inflows into exchange traded funds backed by the digital asset. It was last at $50,0097 in Asian hours.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.15 percent higher in early trading. The index is down 3 percent so far in the year.
Japan’s Nikkei on the other hand has carried on from last year and is up 12 percent for the year. On Tuesday, the index rose 1.7 percent to hit a fresh 34-year high on the back of a weak yen which is nearing the closely-watched 150 per dollar level.
China’s financial markets are closed for the Lunar New Year holiday and will resume trade on Monday, Feb. 19, with Hong Kong markets due to resume on Feb. 14, leaving trading in Asia subdued and taking cues from the Wall Street.
On Monday, the Nasdaq slipped in the afternoon session after briefly surpassing its record closing high from November 2021. The benchmark S&P 500 closed lower but remained just above the 5,000-point level it crossed on Friday. E-mini futures for the S&P 500 fell 0.16 percent
Investor attention this week will be on crucial reports on January’s US Consumer Price Index (CPI), due later in the day, and Producer Price Index, scheduled to be released on Friday.
A slew of recent data, led by strength in the labor market, has underlined the resilience of the US economy and pushed traders to scale back expectations of early and deep interest rate cuts from the Fed.
Markets have all but chalked off chances of a rate cut in March, with traders pricing in a 13 percent chance of an easing compared with 77 percent a month earlier, the CME FedWatch tool showed.
Economists polled by Reuters expect CPI to rise 2.9 percent on a year-on-year basis, down from 3.4 percent in the previous month, with annual core CPI inflation also expected to slow to 3.7 percent in January from 3.9 percent a month earlier. – Reuters
