Most markets track Wall St gains as US data fails to damp rate hopes

Hong Kong – Asian markets mostly rose in line with Wall Street on Wednesday as forecast-beating US inflation data did little to dent expectations that the Federal Reserve will begin cutting interest rates this year.

While February’s consumer price index reading was not ideal — having come in above estimates in January — analysts said it showed price rises were levelling out and that the start of the year often saw a blip.

Attention now turns to the central bank’s policy meeting next week, which will also see the release of policymakers’ outlook for rates for the rest of the year.

Traders are pricing in three reductions before the end of 2024, and a similar forecast by the Fed could line up the first in June, Bloomberg News said.

All three main indexes in New York jumped close to all-time highs and Asia largely extended the rally.

Hong Kong rose for a fourth straight day, while Sydney, Seoul, Singapore, Taipei, Manila and Jakarta were also in positive territory.

Tokyo was weighed by talk that the Bank of Japan could next week begin shifting away from its ultra-loose monetary policy, while Shanghai and Wellington also dipped.

“While traders in the Asian market may feel confused by the combination of hotter-than-expected inflation data and record-high US stocks, Asian stocks are more likely to mirror the optimism from Wall Street,” IG Markets analyst Hebe Chen said.

He did warn, though, that the latest figures “will undoubtedly prompt the Fed to choose their language with extra caution” next week. 

SPI Asset Management’s Stephen Innes added that traders assumed the Fed was happy for inflation to sit above its two percent target for now and were ready to cut several times by the end of the year.

“Investors feel emboldened to pursue high-risk opportunities without fear of facing higher interest rates,” he said in a commentary.

“The Fed’s apparent lack of concern about the risk of a positive wealth effect reigniting demand-side inflation further supports this sentiment.”

Bitcoin was sitting around $72,000, having earlier hit another record within a whisker of $73,000, helped by rate-cut optimism and news this week that Britain’s Financial Conduct Authority watchdog will join US regulators in allowing the creation of crypto-related securities.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 0.4 percent at 38,636.12 (break)

Hong Kong – Hang Seng Index: UP 0.4 percent at 17,168.31

Shanghai – Composite: DOWN 0.5 percent at 3,040.56 

Dollar/yen: DOWN at 147.44 yen from 147.67 yen on Tuesday 

Euro/dollar: DOWN at $1.0925 from $1.0930

Pound/dollar: DOWN at $1.2793 from $1.2795

Euro/pound: DOWN at 85.39 pence from 85.41 pence

West Texas Intermediate: UP 0.6 percent at $78.03 per barrel

Brent North Sea Crude: UP 0.6 percent at $82.39 per barrel

New York – Dow: UP 0.6 percent at 39,005.49 (close)

London – FTSE 100: UP 1.0 percent at 7,747.81 (close)