Investors in Asian markets witnessed a positive trend on Thursday, anticipating the release of crucial US inflation data, which could influence the Federal Reserve’s decisions on interest rate cuts. The optimism followed Wall Street gains, particularly in the tech sector after a slow start to the year, and ahead of the corporate earnings season. Bitcoin experienced a minor dip following a brief rally, fueled by the approval of several cryptocurrency exchange-traded funds (ETFs) by US authorities. Analysts highlighted the significance of the upcoming consumer price index (CPI) reading, with expectations of falling inflation. However, concerns were raised about potential equity sell-offs in the event of an unexpected upside miss in the CPI.
Dealers faced challenges at the start of the year as the previous rally tapered off, with uncertainties regarding the anticipation of a rate cut by March. Matt Eagan of Loomis, Sayles & Co. expressed expectations of the CPI aligning with consensus, projecting headline inflation to bottom below three percent. New York Fed boss John Williams indicated confidence in rates addressing inflation but emphasized the need for a restrictive policy stance to achieve goals over time.
On Wall Street, all three main indexes experienced gains, driven by tech giants like Amazon, Microsoft, and Alphabet, which had a lackluster start in 2024. In Asia, markets enjoyed a positive day, particularly in Tokyo, reaching a fresh 34-year high, fueled by a weak yen benefiting exporters. Other markets in Hong Kong, Shanghai, Sydney, Seoul, Singapore, Taipei, Manila, and Jakarta also saw notable increases.
Bitcoin maintained a value around $46,600, following a brief surge above $47,700 due to the Securities and Exchange Commission’s approval of ETF trading for 11 cryptocurrency funds on major exchanges. Analysts noted that the market response was muted as the decision had largely been factored in over recent weeks. ETFs, allowing exposure to asset price movements without direct ownership, were highlighted as significant.
