Home ›› 11 Aug 2022 ›› Stock
Stocks trembled on Wednesday while major currencies held steady as investors were reluctant to place bets ahead of the release of US inflation data that could point to the Federal Reserve's appetite for more aggressive rate increases.
The Consumer Price Index (CPI) report will be released at 1230 GMT, with markets watching for signs that inflation eased in July despite last week's unexpectedly strong US jobs numbers.
The market is pricing in a 69.5 per cent chance of a 75 bps rate increase at the Fed's next meeting. Economists polled by Reuters expect the CPI to show year-on-year headline inflation of 8.7 per cent, far above the Fed's target of 2 per cent but down from last month's red-hot 9.1 per cent.
Europe's benchmark STOXX index fell 0.43 per cent, following a bigger fall of 1.2 per cent in the MSCI's broadest index of Asia-Pacific shares outside Japan, while Japan's Nikkei closed down 0.65 per cent.
"I don’t think that we are through the bear market woods yet – recession risks loom and I don’t think the Fed is done with its aggressive belt tightening," said David Chao, a global market strategist for Asia Pacific ex-Japan at Invesco.
"I don’t think markets have fully discounted these variables. This week’s inflation data will certainly give us more clarity of the Fed’s near-term policy outlook."
US markets looked set to open broadly flat, with S&P 500 futures down 0.06 per cent.
The dollar was steady, having paused from a retreat that began in the middle of July. The dollar index, which measures the safe-haven greenback against six major peers, was at 106.3.
"A strong CPI print this week could mean the Fed is back to its aggressive rate hiking path, which would re-strengthen the USD," said Chao.
