Asian markets rally ahead of US data, Fed decision

August 29, 2023 (MLN): Asian markets extended a global rally on Tuesday ahead of US data this week that could be key to the Federal Reserve's decision-making on interest rates, as APP reported.

However, worries over China's economy continue to dampen sentiment, with authorities facing growing calls to introduce a huge stimulus to revive the stuttering post-Covid recovery.

After a painful August on trading floors, investors have enjoyed a positive start to this week, with Federal Reserve boss Jerome Powell's insistence that monetary policy would be based on a range of indicators fuelling hope the tightening cycle has drawn to a close.

This week sees the release of the US central bank's preferred gauge of inflation, the personal consumption expenditures (PCE) price index, as well as jobs creation and factory activity.

"The trio should tell investors where critical factors in the Fed's decision tree on rates lie following the central bank's gathering in Jackson Hole last week and ahead of a scheduled meeting in September," said Stephen Innes at SPI Asset Management.

While inflation is easing, Fed officials have warned it remains too high at 3.2%, well above their 2% target, and that borrowing costs might have to rise or at least remain elevated until they are satisfied prices have been tamed.

That, however, has led to concerns that they could deal a blow to the economy. Anthony Saglimbene, at Ameriprise, said: "Investors want to see economic releases this week that suggest activity is slowing enough to keep further rate hikes at bay, but not too slow to indicate the economy is headed for a recession."

In early trade Tuesday, Asian markets were up across the board. Hong Kong climbed more than one percent thanks to a surge in tech giants, while Tokyo, Sydney, Seoul, Singapore, Taipei, and Jakarta were also up.

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