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Global equity/currency market update: Asian stocks reach 15-month high ahead of U.S. inflation data

14 May 2024 8:50 am
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Mumbai, 14 May (Commoditiescontrol): Asian equity markets touched a 15-month peak on Tuesday, with investors showing a robust appetite for risk ahead of key U.S. inflation figures set to be released later this week. MSCI's broadest index of Asia-Pacific shares outside Japan saw marginal gains, propelled by a sustained rally in Hong Kong and steadying global market trends.

The Hang Seng index in Hong Kong continued its impressive surge, marking a nearly 20% increase over the past month and 30% since January. This bullish momentum underscores the broader regional optimism, despite the varying economic signals from major economies.

In Japan, the Nikkei remained unchanged, although the Japanese government bond market reacted as yields crept up following the central bank’s announcement of a reduction in its bond-buying program—the first cut since December. The 10-year yield edged up to 0.95%, a high not seen since last November, while the five-year yield reached levels last recorded in 2011.

Currency markets were relatively stable, though the dollar showed strength against the yen, reaching a high for the month amid speculation of intervention by Japanese authorities. The euro and the currencies of Australia and New Zealand held within recent ranges, demonstrating a cautious stance from traders as they await further economic indicators.

In the U.S., the focus is intensely set on the upcoming Consumer Price Index (CPI) data for April, expected on Wednesday. Market participants are eager to see if the inflation rate, anticipated to slow to 3.6% from March’s 3.8%, indicates a temporary spike or a more troubling trend. This follows a New York Fed survey suggesting Americans expect inflation to be higher next year than previously anticipated.

Meanwhile, U.S. markets remained steady with the S&P 500 near record highs. In commodities, Brent crude and spot gold prices were broadly steady, underlining a cautious but stable market environment.

Investor sentiment was also influenced by mixed economic data from China, including a third consecutive monthly rise in consumer prices and stronger-than-expected import figures, balanced against historically low credit growth. This combination suggests that while monetary policy may be reaching its effectiveness limits, the government might lean towards fiscal measures to bolster growth.

In other regional news, New Zealand reported a drop in inflation expectations, while Australia’s Fletcher Building adjusted its financial outlook downwards amid a slowing housing market. On a positive note, shares in GUD Holdings in Australia jumped 9% after the company reassured investors of meeting its financial targets.

As the global financial community braces for the U.S. inflation data, the anticipation is palpable, with implications likely to ripple across markets worldwide.

(By Commoditiescontrol Bureau: 09820130172)

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