Source: AFP
Asian shares rose in the morning session on Tuesday as traders weighed the outlook for US interest rates ahead of the release of a key inflation measure.
Investors are also gearing up for corporate earnings season, with some observers warning that earnings expectations, which have helped several markets to record highs, may have gone too far and disappointing reports could send shares lower.
While last week’s Federal Reserve guidance indicated three cuts before the end of the year, strong economic data and comments from some central bank officials have fueled concerns that it may fail.
The forecasts sparked a rally in markets and calmed traders who had been spooked by data last week that showed consumer and wholesale prices rose more than expected in February.
However, with the US economy still showing little sign of trouble and the labor market remaining cautious, personal consumer spending (PCE) – the Fed’s preferred gauge – will be the main focus.
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Asian markets are mixed as US inflation fundamentals emerge
Readings on economic growth, jobless claims and business sentiment are also available.
βAfter a strong performance last week, investors may be taking a break and possibly enjoying the spring break, while others are taking a wait-and-see approach for the next bullish catalyst, such as a favorable outcome from the Fed’s preferred inflation measure. ” said Stephen Innes of SPI Asset Management.
“In this context, a ‘clean’ signal would imply that inflation data will meet consensus expectations or come in lower than expected.”
Mixed messages from Fed officials in recent days have done little to dispel any uncertainty.
Atlanta President Rafael Bostic on Monday repeated his comments that he saw only one cut this year, adding that acting too quickly could cause disruption, while Gov. Lisa Cook said decision makers should be careful.
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Asian markets struggle as US data dampens optimism for Fed rate cut
However, Chicago Fed chief Austan Goolsbee stuck to the three-cut line.
All three major indexes ended on Wall Street as talk swirled that the recent rally may have been overdone.
Asia was mixed, with Hong Kong, Singapore, Seoul and Taipei rising but Tokyo, Shanghai, Sydney, Wellington, Manila and Jakarta in the red.
The yen held above 151 per dollar, with any further weakness offset by a warning from Japanese officials that they were ready to step in to support the currency if it fell too far.
And oil prices held on to Monday’s gains on renewed geopolitical concerns and after the latest attack on a Russian crude refinery fueled supply concerns, while Israel’s planned offensive on Gaza’s Rafah also caused some concern.
Keys around 02:30 GMT
Tokyo – Nikkei 225: Down 0.1 percent at 40,364.40 (break)
Hong Kong – Hang Seng Index: UP 0.6 percent at 16,568.54
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Shanghai Composite: DOWN 0.2 percent at 3,020.42
Dollar/yen: DOWN at 151.33 yen from 151.42 yen on Monday
EUR/USD: UP at $1.0843 from $1.0841
GBP/USD: UP at $1.2645 from $1.2638
Euro/pound: DOWN to 85.74 pence from 85.76 pence
West Texas Intermediate: UP 0.3 percent at $82.22 a barrel
North Sea Brent crude: UP 0.3 percent at $86.98 a barrel
New York – Dow: Down 0.4 percent at 39,313.64 (close)
London – FTSE 100: Down 0.2% to 7,917.57 (close)
Source: AFP