Asia Markets Open Higher Ahead of US Inflation Report
Asian markets opened higher on Tuesday following a positive close on Wall Street. Investors are eagerly awaiting a crucial U.S. inflation report later in the day, which will likely set the tone for the Federal Reserve’s final meeting of the year on Wednesday.
U.S. futures and oil prices advanced, with Tokyo’s Nikkei 225 adding 0.5% to 32,959.50. Data released on Tuesday showed the wholesale prices in Japan rose by 0.3% from the previous year in November, which marked the slowest rate of increase in almost three years, suggesting a moderation in inflationary pressure in the economy.
Hong Kong’s Hang Seng gained 1.1% to 16,367.00, and the Shanghai Composite edged 0.1% higher, to 2,993.65. Chinese leaders are holding an annual economic conference expected to wrap up Tuesday with pledges to spur stable growth.
In Seoul, the Kospi was up 0.4% at 2,534.15. Australia’s S&P/ASX 200 climbed 0.5% to 7,233.90, while India’s Sensex gained 0.2%. The SET in Bangkok lost 0.3%.
On Monday, the S&P 500 rose 0.4% to 4,622.44, finishing at its highest level in 20 months. The Dow gained 0.4% to 36,404.93 and the Nasdaq added 0.2% to close at 14,432.49.
The muted gains follow a six-week winning streak by the major stock indexes. The S&P 500 is up 20.4% for the year and the Nasdaq is up 37.9%.
Cigna surged 16.7% for the biggest gain among S&P 500 stocks after the health insurer announced a $10 billion stock buyback, and the Wall Street Journal reported that the company is no longer pursuing a merger with Humana. Macy’s jumped 19.4% following reports that an investor group is launching a bid to take the storied retailer private for $5.8 billion.
On Tuesday, the government will release its November report on consumer inflation. Analysts expect the report to show that inflation continued slowing to 3.1% from 3.2% in October. On Wednesday, the government will release its November report on inflation at the wholesale level, which is also expected to show that the rate of inflation is easing.
Wall Street is overwhelmingly betting that the Fed will keep its benchmark interest rate at a range of 5.25% to 5.50% into early 2024 and could start cutting rates by the middle of that year.
“With inflation coming down faster than expected, it now appears likely that the Fed will refrain from additional rate hikes,” Brian Rose, a senior U.S. economist at UBS, said in a note to investors. “At the same time, inflation is still too high and the labor market is still too tight for the Fed to consider cutting rates soon.”
Strong consumer spending and a solid jobs market have provided a bulwark to the broader economy, where growth has slowed but has so far avoided stalling. Treasury yields were little changed, and in energy trading, U.S. benchmark crude oil added 25 cents to $71.57 per barrel in electronic trading on the New York Mercantile Exchange. The U.S. dollar fell to 145.60 Japanese yen from 146.16 yen, and the euro rose to $1.0769 from $1.07613.