Source: AFP
Asian markets struggled on Thursday after another tepid performance on Wall Street, with the focus on the release of key U.S. inflation data coming as traders increased bets that the Federal Reserve will cut interest rates next year.
Observers say signs that the world’s top economy is feeling the effects of prolonged monetary tightening have given the bank room to take a more targeted approach to combating inflation, which has fallen sharply from four-decade highs. in 2022.
That, combined with several Fed policymakers saying they favor keeping rates where they are, has given investors a much-needed boost of confidence at the end of a difficult year.
And the latest reports have given further optimism.
The Fed’s Beige Book summary of the economy showed that activity had slowed in recent weeks and the labor market continued to cool — policymakers said some easing in jobs would be needed to bring inflation back to their two percent target a hundred.
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Gross Domestic Product grew faster than expected in the third quarter and consumer spending growth slowed slightly.
The metrics show that the Fed is managing to control prices while not causing much pain to the economy.
All eyes now turn to the release of the personal consumption expenditure (PCE) index — the bank’s preferred gauge of inflation — with forecasts pointing to further easing. The key reading came in slightly lower than expected, data showed on Tuesday.
“The Fed could be in a ‘sweet spot,'” said Jeffrey Roach at LPL Financial.
“Inflation is moving lower, the consumer is still spending — but at a slower pace — and the Fed could end its rate hike campaign without causing much pain to the economy.”
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Traders are now predicting a cut in the first half of next year.
Cleveland Fed chief Loretta Mester said she would favor a third straight pause at the December meeting, while her counterpart in Atlanta, Rafael Bostic, said he was confident inflation would fall.
The comments followed similar statements from other policymakers earlier in the week, although Richmond Fed President Thomas Barkin warned of the need to keep the option of another hike open if inflation eases again.
Bank of Singapore’s Mansoor Mohi-uddin warned that the economy will likely face headwinds in 2024, but remained bullish on the outlook for equities.
“Less fiscal stimulus, rising unemployment and falling savings will weigh on economic activity in 2024,” he wrote.
“We forecast that the U.S. will likely experience a mild recession next year. But with core inflation falling below 3% toward the 2% target, we believe the Fed will begin cutting the Fed funds rate every quarter , based on 25-point June, September and… December cuts.
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“Fed easing will be measured but will benefit risk assets.”
Still, markets were subdued on Thursday in Asia after a largely flat day in New York.
Tokyo, Hong Kong, Singapore, Taipei and Manila sank, while in the green were Shanghai, Sydney, Seoul, Wellington and Jakarta.
Oil fell after rallying on Wednesday after a report that OPEC and its allies were considering additional cuts of up to a million barrels a day.
Saudi Arabia and Russia have already imposed huge cuts this year in a bid to support prices, but the latest decision has proved harsh as African producers fight back against the move.
The team will hold an online meeting later Thursday to make the announcement.
Keys around 02:30 GMT
Tokyo – Nikkei 225: Down 0.2 percent at 33,255.37 (break)
Hong Kong – Hang Seng Index: DOWN 0.2 percent to 16,957.65
Shanghai – Composite: UP 0.1 percent to 3,024.94
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![](https://images.yen.com.gh/images/367f6f541266ab5d.jpg?impolicy=cropped-image&imwidth=256)
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Dollar/yen: DOWN at 147.06 yen from 147.22 yen on Wednesday
EUR/USD: DOWN to $1.0975 from $1.0978
GBP/USD: DOWN to $1.2695 from $1.2698
Euro/pound: UP at 86.46 pence from 86.43 pence
West Texas Intermediate: DOWN 0.3% to $77.65 a barrel
Brent North Sea crude: Down 0.2% at $82.90 a barrel
New York – Dow: UP less than 0.1 percent at 35,430.42 (close)
London – FTSE 100: Down 0.4 percent to 7,423.46 (close)
Source: AFP