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Asia Stocks Rise Amid Focus on US Inflation Data

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Asian Markets

Equities mostly climbed in Asia on Wednesday after a subdued day on Wall Street, as investors focused on the imminent release of crucial US inflation data, which could significantly impact interest rate expectations.

Following last week’s robust jobs report, indicating a resilient economy, there’s apprehension on trading floors that a third consecutive overshoot in consumer prices might prompt the Federal Reserve to postpone rate cuts.

“The consumer price index is the critical number this week,” remarked Andrew Brenner of NatAlliance Securities. “The fear is that CPI has continued to be a thorn in the side of the Fed.”

He noted that market sentiment is strongly bearish.

Expectations for rate cuts this year have diminished from six at the year’s onset to possibly three, with some even considering zero. However, some argue that no rate cuts could be the price for sustained economic health and robust earnings.

Atlanta Fed chief Raphael Bostic struck a pragmatic tone on Tuesday when discussing the bank’s strategy. While reiterating a forecast of one reduction this year, he remained open to reassessment based on incoming data.

Responding to inquiries about the possibility of maintaining rates unchanged all year, he stated, “I do think the risks are balanced, and given that the US economy has been so robust and resilient… I can’t rule out the possibility that rate cuts may need to be postponed further.”

However, he also acknowledged, “if I started to receive different signals suggesting potential labor market distress, then I’d consider altering our policy stance and possibly cutting rates sooner.”

Krishna Guha at Evercore maintained optimism ahead of the CPI reading, suggesting that “the odds are the data will come in good enough to proceed.”

On Wall Street, the S&P 500 and Nasdaq registered modest gains, while the Dow dipped marginally.

In early Asian trading, Hong Kong surged over one percent, with Sydney, Taipei, and Wellington also in positive territory, although Shanghai edged lower.

Tokyo experienced declines as a stronger yen weighed on exporters. The currency strengthened against the dollar following less-dovish comments from Bank of Japan chief Kazuo Ueda.

The yen’s exchange rate, particularly against the dollar, has been closely monitored, with many observers identifying 152 yen per dollar as a threshold prompting authorities to intervene to support the Japanese currency.

Last month, the central bank raised interest rates for the first time since 2007, as inflation remains significantly above officials’ target, fueling speculation about future moves.

Addressing lawmakers on Tuesday, Ueda noted, “We must consider scaling back monetary easing if the underlying price trend aligns with our outlook.”

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Weekly U.S. Stock Market Reports Diverse Performance

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Reviewing the U.S. Stock Markets, the Nasdaq Composite, recorded a decent hike of 555 points, reaching a closing value of 17,688 points by the end of the week. Similarly, the S&P 500 index showed a positive trend, gaining 85 point to settle at 5,431 points. Meanwhile, DJIA Index experienced a notable drop, losing 209 points during the week and concluding at 38,589 points after a week of gaining.

In contrast, Russell 3000 Index saw a gain in week performance, with a slight hike of 40 points to reach 3,077 points by the end of the week.

Moving to Russell 2000 Index, demonstrated a notable drop of 20 point, ending the week at 2,006 points.

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Weekly European Stocks Shows Negative Result

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In the Outgoing week, the European stock market displayed a massive losing performance.

Here is the data on the weekly performance of the European Stock Market, The STOXX Europe 600 index, which is considered a leading benchmark for the European market and covers approximately 90 percent of the market capitalization across 17 countries, reported a drop of 12.5 points to close at 511.05.

The United Kingdom’s FTSE 100, one of the most widely followed indices in Europe, also showed a significant drop, losing 99 points or finishing the session at 8,146.

In Germany, the DAX 30 index, lost by 555 points to reach 18,002, while France’s CAC 498 decreased by 9 points to stop at 7,503 at the end of the trading day.

Italy’s FTSE MIB, which covers the top 40 stocks traded on the Milan Stock Exchange, decreased by 1,995 points to 32,665. However, Spain’s IBEX 35, added by 412 points, to close at 10,992.

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South Asian Stocks Reports Gaining Performance in Recent Week

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A review of South Asian stock markets shows that India’s Bombay Stock Exchange (BSE) index BSE Sensex has added 299 points during the week. At the end of the week, the index stood at 76,992 points. On the other hand, the Nifty-50 index of the country’s National Stock Exchange gained by 175 points last week. At the end of the week, the index stood at 23,465 points.

Pakistan Stock Exchange Index ‘KSE 100’, shed 2,926 points last week. After a week of losing, the index settled at 76,742 points.

On the other hand, The Sri Lankan stock market index adds, and the Colombo Stock Exchange index ‘ASPI’ increased by 208 points in a week. After a week the index settled at 12,314 points.

Bhutan’s stock market index ‘BSI’ added 68 points hence the index stood at 1,515 points throughout the whole week. Nepal’s ‘NEPSE’ gain 35 points, therefore the index stands at 2,112 points.

Hence Dhaka Stock Exchange: The benchmark index ‘DSEX’ dropped by 119.51 points or 2.28 percent, in the outgoing week. At the end of the week, the index stands at 5,117 points.

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