April 12, 2023 (MLN): Asia market exhibited mixed reactions on Wednesday as investors were awaiting the US inflation data that could play a crucial role in the Federal Reserve's decision-making on interest rates, as APP reported.
While a healthy jobs report last Friday helped allay concerns of a possible recession, it also reinforced expectations that the central bank would tighten monetary policies to cool down the economy and reduce inflation.
Meanwhile, there have been recent improvements in the financial sector, following the turmoil last month that saw two US lenders go under. Neel Kashkari, the Minneapolis Fed's head, said, "There are hopeful signs that these risks are now better understood, and calm is being restored." However, investors and analysts believe that the next few days' reports could be pivotal in determining market sentiment.
Wednesday's report on consumer prices will be followed by Thursday's report on wholesale prices and the start of the corporate reporting season on Friday. As the Fed continues its rate hike drive, there appears to be a split among its officials on the best way forward. While Chicago Fed's boss Austan Goolsbee urged caution and patience, saying that officials should weigh the effects of tightening and the banking upheaval, New York's John Williams said another rate increase before pausing was a "reasonable starting place." Both officials have said that incoming data would play a crucial role in their decision-making.
Investors are hopeful that the Fed will soon stop lifting rates and could even begin cutting them before the end of the year. Analysts have noted that the modern-day history book of Fed cuts is very bullish for stocks, and if the Fed does decide to cut later in 2023, they typically cut twice as fast as they hike.
After a mixed performance on Wall Street, Asian markets followed suit on Wednesday, reflecting the uncertainty among investors as they await the release of key data that will determine the Fed's next move.
Copyright Mettis Link News
Posted on: 2023-04-12T09:29:26+05:00
