Asian stocks edged ahead on Thursday as traders jostled for position ahead of the release of US inflation data later in the day that could have a huge bearing on the Federal Reserve’s rate hike plans.
A broadly positive week for global equities continued on Wednesday thanks to some healthy earnings results, the further reopening of economies and signs of an easing in Russia-Ukraine tensions.
While the mood for now is positive, nerves are on edge as the US consumer price index figures come up for release.
Commentators warn that a reading above the forecast 7.2% – which would be a new four-decade high – would pressure the Fed to act more aggressively to rein in prices.
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Surging inflation and bets that the US central bank will end its pandemic-era cheap cash policies have weighed on world markets in recent months, stalling a two-year rally that saw them hit record or multi-year highs.
But there is a feeling in some quarters that investors may be already getting used to the prospect of higher borrowing costs, while still-strong economic data and the easing of containment measures will continue to support company earnings.
All three main indexes on Wall Street chalked up strong gains on Wednesday, while London, Paris and Frankfurt piled on more than 1% apiece.
Asia battled to maintain the momentum and fluctuated through the day but gainers came out on top.
Tokyo, Hong Kong, Shanghai, Seoul, Taipei, Mumbai and Bangkok were solidly higher and Singapore eked out small gains. Wellington, Jakarta and Manila edged down. London, Paris and Frankfurt all rose at the open of trade.
The benchmark Nikkei 225 index rose 0.42%, or 116.21 points, to 27,696.08 while the broader Topix index added 0.53%, or 10.39 points, to end at 1,962.61.
Russia Ukraine Stand-Off
The Hang Seng Index climbed 0.38%, or 94.36 points, to 24,924.35. The Shanghai Composite Index added 0.17%, or 5.96 points, to 3,485.91, while the Shenzhen Composite Index on China’s second exchange slipped 0.64%, or 14.76 points, to 2,302.47.
There is a general consensus that the outlook for the global economy is positive and markets will recover as inflation is brought under control thanks to easing supply snarls, but some observers remain cautious.
Still, concerns over the stand-off between Russia and Ukraine appeared to be easing after French President Emmanuel Macron said Russian counterpart Vladimir Putin had told him that Moscow “would not be the source of an escalation.”
Signs of progress on the diplomatic front in Eastern Europe have kept a cap on oil prices in recent days, as has the possibility of a revived Iran nuclear deal, which could see Tehran resume worldwide exports and ease supply problems.
Both main contracts were slightly higher on Thursday, having rallied this year to their highest levels since 2014.
Key figures around 0820 GMT
Tokyo > Nikkei 225: UP 0.4% at 27,696.08 (close)
Hong Kong > Hang Seng Index: UP 0.4% at 24,924.35 (close)
Shanghai > Composite: UP 0.2% at 3,485.91 (close)
London > FTSE 100: UP 0.1% at 7,647.52
New York > Dow: UP 0.9% at 35,768.06 (Wednesday close)
- AFP with additional editing by Sean O’Meara
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