Asian stocks rise after China inflation data By

© Reuters.

by Gina Lee – Asia-Pacific shares were mostly higher on Wednesday morning, with U.S. stock futures also trending higher. Investors digested the latest inflation data from China, while also awaiting U.S. data that could shed light on whether price pressures have peaked.

As of 10:27 p.m. ET (2:27 a.m. GMT), Chinese stocks were up 1.43% and 1.57% higher. Data released earlier in the day showed that the consumer price index (CPI) rose 0.4% and 2.1%, respectively, in April 2022. An increase of 8% year-on-year.

Hong Kong rose 1 percent.

Japan rose 0.37% and South Korea fell 0.06%.

In Australia, the index edged down 0.14%, a much steeper decline in May 2022 than the 0.9% contraction in the previous month.

Tuesday’s rally in U.S. stocks provided a little respite from a slump in stocks so far in 2022 amid fears of a recession due to high inflation. U.S. Treasury yields were little changed, while the dollar remained at its highest level since 2020 as investors digested the latest Fed comments.

Fed officials mostly agreed with Chairman Jerome Powell that a half-percentage-point rate hike is likely in June and July 2022. However, Cleveland Fed President Loretta Mester told Bloomberg that “we won’t rule out 75 percentage points forever,” referring to a more aggressive, three-quarters rate hike. Powell and Mester’s colleague, San Francisco Fed President Mary Daly, will speak on Thursday.

Investors now await U.S. stocks due later in the day. That figure is expected to slow, but remains above 8%, according to forecasts. Disruptions related to the February 24 Russian invasion of Ukraine and the ongoing COVID-19 outbreak in China have also contributed to higher living costs.

Ellen Hazen, chief market strategist at FL Putnam Investment Management Co., told Bloomberg that high U.S. printing “will give the Fed the license to raise rates faster,” which is very negative for tech stocks.

The U.S. is also due to release its PPI on Thursday, with the University of Michigan consumer confidence index a day later.

Schutte, chief investment strategist at Northwestern (NASDAQ: ) Mutual Life Insurance Co., told Bloomberg that the “barrier for surprise” for U.S. inflation data is “low” amid sluggish consumer sentiment.

“It’s going to be a little bit better on the margins… There’s less overall Fed tightening. That’s going to cause the market to start to gain ground and move higher in the coming quarters as inflation does end,” he added.

Meanwhile, oil prices fell below the $100 mark after falling about 10% this week as growing concerns over China’s COVID-19 lockdown dented crude and metals. Ukraine and Russia are also clashing over pipelines to Europe, which could disrupt supplies on the continent, causing those prices to climb as well.

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