Asian shares traded in mixed session on Wednesday ahead of pivotal U.S. inflation data that could signal whether the Federal Reserve is done raising interest rates aggressively.
As of 9.33 A.M. Bangkok time, the Nikkei 225 in Japan slid 0.82%. According to official figures, wholesale inflation in the country slowed to its lowest pace in six months, with the business goods price index increasing by only 4.1% year over year.
South Korea’s Kospi traded functionally lower as the country’s unemployment rate rose marginally to 2.6% in June.
The Hang Seng in Hong Kong gained 1.0% while the Shanghai Composite in mainland China dropped 0.1%.
The S&P/ASX 200 in Australia rose by 0.39%.
The three major U.S. indices all finished the day higher, with the Dow Jones Industrial Average rising by the most, 0.93%. The broader S&P 500 index rose 0.67% and the tech-focused Nasdaq composite added 0.55%.
The June core inflation rate for the United States is expected to drop to 5% from 5.3% in May, according to a Reuters survey of economists, but this is still much above the Federal Reserve’s 2% target.
Meanwhile, the consumer price index is expected to have increased by 3.1% in June, following a 4.0% increase in May. That would be the lowest number seen since March of 2021.
The Fed will use the inflation data, together with Thursday’s report on producer prices, to determine the next step in its rate-hiking cycle.
According to the CME FedWatch tool, the markets currently price in a 92% chance of a 25 basis point raise by the end of the month, but they remain skeptical about any further hikes beyond that.
In order to combat ongoing pricing pressures, Fed policymakers have signaled that they want to raise interest rates by at least another 50 basis points.
