On Thursday, Asian stock markets mostly advanced ahead of U.S. consumer price data, which investors hoped would show that inflation is slowing in December, signaling to the Federal Reserve that recent interest rate hikes have had the desired impact.
Australia’s S&P/ASX 200 was up 1.14% at 9.26 a.m. (Thai time) following the release of the country’s November trade balance.
The Nikkei 225 was flat. The Kospi in South Korea gained 0.32%.
The Hang Seng index in Hong Kong increased by 0.93%. The Shanghai Composite in Mainland China rose 0.17%. China’s consumer price index rose 1.8% year on year in December, matching Reuters’ forecast.
The major stock indices on Wall Street all finished the night in the green. Dow Jones economists polled expect the December inflation print to indicate that prices fell by 0.1% from November.
Markets are pricing in better-than-even odds that the Federal Reserve will down its breakneck pace and rise by 25 basis points instead of 50 at its meeting next month as a result of falling inflation reducing the necessity for interest rate hikes.
Jan Nevruzi, a U.S. rates strategist at NatWest Markets, has indicated that the CPI report could help settle the discussion for the February meeting.
“We expect a below consensus CPI print, which if it materializes, could push this rally even further.”