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Global equity/currency market update: Asian Equities Surge Amid Mixed Signals from U.S. Inflation and Fed Policy

13 Jun 2024 8:56 am
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Mumbai, 13 Jun (Commoditiescontrol): Asian equities rallied on Thursday, driven by cooling U.S. inflation data, despite a more hawkish stance from the Federal Reserve. The MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.9%, with Taiwan's stocks soaring 1.7% and Hong Kong's Hang Seng climbing nearly 1%. This upward momentum followed the U.S. S&P 500 and tech-heavy Nasdaq, which closed at record highs overnight.

U.S. futures also indicated further gains, with S&P futures up 0.2% and Nasdaq futures rising 0.6%. In contrast, Japanese shares underperformed slightly, with the Nikkei edging up just 0.1% after an early tech-led surge fizzled out. The yen inched down against the dollar as the Bank of Japan commenced its two-day policy meeting.

The surge in Asian markets was largely influenced by Wall Street's strong rally. The U.S. dollar and Treasury yields tumbled early in the session following the release of the CPI report, which showed core prices growing at their slowest annual pace in over three years. However, investors faced mixed signals later as Federal Reserve officials revised their projections, indicating only a single quarter-point rate cut this year.

Fed Chair Jerome Powell, in his post-meeting press conference, acknowledged the significant easing of inflation but emphasized that it remains too high. He noted that the rate-path decision was a "close call" for many policymakers, with some adjustments likely pushed to 2025.

The U.S. 10-year Treasury yield remained relatively stable at 4.31% on Thursday after a volatile session on Wednesday, where it dipped to its lowest since April 1 following the CPI data. Japanese government bond yields also fell, with the 10-year yield dropping as much as 3 basis points to 0.955%.

The yen, which had advanced 0.28% on Wednesday, fell 0.14% to 156.92 per dollar. Meanwhile, the euro held steady at $1.0808, and the dollar index edged up 0.07% to 104.76.

Gold prices eased by 0.3% to $2,315.55 per ounce, while crude oil prices fell slightly under pressure from rising U.S. stockpiles. Brent crude futures declined by 14 cents to $82.46 a barrel, and U.S. West Texas Intermediate (WTI) crude futures dropped by 16 cents to $78.34, after both benchmarks gained about 0.8% in the previous session.

Overall, the mixed signals from the U.S. Federal Reserve and the ongoing economic uncertainties continue to influence market movements across the globe.

(By Commoditiescontrol Bureau: 09820130172)

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