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Investing.com – Asia Pacific stocks were mostly up on Wednesday morning, and U.S. equity futures were also on an upward trend. Investors digested the latest inflation data from China while also awaiting U.S. data that could provide clues as to whether price pressures are peaking.
China’s Shanghai Composite rose 1.43% by 10:27 PM ET (2:27 AM GMT) and the Shenzhen Component jumped 1.57%. Data released earlier in the day showed that the consumer price index (CPI) for April 2022 grew 0.4% month-on-month and 2.1% year-on-year. The producer price index (PPI) also rose 8% year-on-year.
Hong Kong’s Hang Seng Index rose 1%.
Japan’s Nikkei 225 was up 0.37% while South Korea’s KOSPI inched down 0.06%.
In Australia, the ASX 200 edged down 0.14%, with the Westpac Consumer Sentiment index for May 2022 contracting 5.6%, a much bigger drop that the previous month’s 0.9% contraction.
A climb in U.S. stocks on Tuesday provided a small respite from the equity rout in 2022 to date, fueled by fears of an economic 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 Federal Reserve comments.
Fed officials were mostly in line with Chairman Jerome Powell’s view that half-point hikes are possible in June and July 2022. However, Cleveland Fed President Loretta Mester told Bloomberg that “we don’t rule out 75 forever,” in reference to a more aggressive, three-quarter-point hike. Powell and Mester’s colleague, San Francisco Fed President Mary Daly, will speak on Thursday.
Investors now await the U.S. CPI, due later in the day. The figure is expected to moderate but stay above 8%, according to forecasts prepared by Investing.com. Disruptions linked to Russia’s invasion of Ukraine on Feb. 24 and China’s ongoing COVID-19 outbreak are also contributing to increased living costs.
A high US print “will give the Fed license to raise rates even faster” and would be very bad for technology stocks, F.L. Putnam Investment Management Co. chief market strategist Ellen Hazen told Bloomberg.
The U.S. will also release its PPI on Thursday, with the University of Michigan consumer sentiment due a day later.
The “bar is low” for a surprise from the US inflation data amid ebbing consumer sentiment, Northwestern (NASDAQ:NWE) Mutual Life Insurance Co. chief investment strategist Brent Schutte told Bloomberg.
“Things are going to be just a bit better at the margin… the Fed overall is going to tighten less. That will lead to a market that begins to find its feet and move higher in coming quarters as inflation does come off the boil,” he added.
Meanwhile, oil was below the $100 mark after dropping around 10% this week as growth concerns over China’s COVID-19 lockdowns sap crude and metals. Ukraine and Russia also clashed over natural gas sent via pipelines to Europe that could disrupt supplies in the continent, causing those prices to climb as well.
