February 14, 2023 (MLN): Many Asian equities rose on Tuesday, following gains on Wall Street ahead of the release of critical US inflation data, as reported by AFP.
However, some analysts warned that the optimism may be overstated. The Federal Reserve's interest rate hikes to cool down the economy has left traders on edge.
The upcoming release of the consumer price index (CPI) is expected to have decreased to 6.2% in January from 6.5% in December, but this is still well above the Fed's target of 2%.
Analysts caution that a higher CPI reading could trigger a significant sell-off in the markets, especially with concerns that the US may fall into a recession.
Hong Kong experienced a decline in tech firms, while the yen increased slightly against the dollar. Japanese Prime Minister Fumio Kishida nominated respected economics professor Kazuo Ueda to take the helm at the Bank of Japan, which faces the daunting task of reviving the sluggish economy while dealing with mounting pressure to tighten monetary policy.
Morgan Stanley strategists warned of sharp equity losses this year, with the S&P 500 expected to end the year almost 5% below Friday's close.
