Home ›› 16 Sep 2022 ›› Stock
Asian stocks edged higher at the open on Thursday, tracking gains on Wall Street as markets adjusted following a rout this week on higher-than-expected US inflation data.
The data showed US yearly inflation slowing less than expected and monthly inflation rising, stoking fears that the US Federal Reserve would continue its aggressive tightening of monetary policy.
On Thursday, bourses in Tokyo, Hong Kong and Seoul opened cautiously up.
Analysts said markets were rebounding from the steep losses that followed the inflation data, and to price in an expected 75 basis-point interest rate hike by the Fed at a meeting next week.
The release of US producer price data also affected market sentiment, showing producer costs dropping for the second straight month, mainly driven by falling US fuel prices.
Stock markets have stabilised a little after Tuesday's rout which saw risk assets pummelled across the board, said Craig Erlam, senior market analyst at OANDA.
Tokyo -- the previous day's biggest loser in Asia -- rebounded slightly on Thursday but investors remained wary of the speed and degree of future US rate hikes.
Investors remain deeply cautious about potentially excessive monetary tightening in the United States, Okasan Online Securities said in a note.
On Wednesday, Wall Street stocks rose as investors prepared for next week's Fed decision, with the Dow rising 0.1 per cent and the S&P 500 gaining 0.3 per cent.
Any US interest rate hike tends to strengthen the dollar, and Asian currencies remain at risk from the strong greenback.
On Thursday, the Australian dollar traded near a two-year low, with the yen at near 143 to the US dollar.
A day earlier, Japan's central bank conducted a rate check operation on the yen, a move seen as a precursor to possible intervention, and which served to bring the currency back from the 145 level that is widely seen as a threshold by the market.
'Front-running' predictions
Global consumer prices have soared for months, exacerbated by Russia's invasion of Ukraine -- which has hiked energy and food costs -- and because of supply chain strains and Covid lockdowns in China.
Analysts say markets have been trying to front-run predictions of when inflation will peak.
There appears to have been a tendency in recent months to front-run certain releases in the hope that it's going to prove to be the 'pivot' moment when everything starts to look up, central banks can ease off the brake and risk assets will have bottomed, said OANDA's Erlam.
All eyes are now firmly on the Fed's meeting next week, where another 75 basis-point rise is widely expected, after two consecutive increases of the same size.
