Shares in Asia markets continued a rally on Wednesday, following a trend seen in Wall Street overnight, as investors braced for the US consumer price index that will influence the Federal Reserve’s interest rate policy.
The S&P/ASX 200 in Australia was up 0.98% at 9.35 a.m. (Thai time) ahead of the release of November inflation data. The Nikkei 225 index gained 1.0%.
The Kospi increased 0.11% despite South Korea’s jobless rate rising to 3.3% in December from 2.9% in November, the most in 11 months.
The Hang Seng index in Hong Kong increased by 1.06%. The Shanghai Composite in Mainland China rose 0.28%.
On Wall Street, major market indexes closed higher overnight as investors built on the new year’s early gain. In a speech, Fed Chairman Jerome Powell underlined the significance of the central bank’s independence from political influence, without providing direct hints on where monetary policy is heading.
This week, investors’ focus will be firmly on the US consumer price index (CPI), which is set to be reported on Thursday. The headline annual inflation rate is projected to be 6.5% in December, down from 7.1% in November.
The data released on Thursday will be key in determining what the Fed will do with interest rates at its next meeting, which will take place at the beginning of next month.
After four consecutive 75 bps hikes in 2022, the U.S. central bank raised interest rates by 50 bps in December, but it has since reaffirmed that it will keep rates higher for longer to contain inflation.
According to Stephen Wu, economist at Commonwealth Bank of Australia, investors are expecting that the upcoming inflation report will show more deceleration, perhaps providing the Fed flexibility to slow the pace of interest rate rises.
