AUSTRALIA. Sydney: On Tuesday, Asian stocks followed Wall Street’s rally, as investors remained confident that key U.S. economic data would show an increase in inflation. At the same time, the Japanese yen recouped losses as Japan appointed a new central bank governor.
The yen’s value has dropped since it was unclear who the new governor of the Bank of Japan would be. Tuesday saw the government’s surprise appointment of academic Kazuo Ueda, which may increase the likelihood that the unpopular yield control programme will be abandoned.
The broadest MSCI index of Asian-Pacific stocks traded outside Japan (.MIAPJ0000PUS) rebounded by 0.3%. In Japan, the Nikkei (.N225) increased by 0.5%.
Blue chips (.CSI300) in China eased 0.1%, and Hong Kong’s Hang Seng Index (.HSI) fell 0.3% as Chinese shares reversed early advances to end the day lower.
In some good geopolitical news, U.S. Secretary of State Antony Blinken is thinking about meeting top Chinese diplomat Wang Yi at the Munich Security Conference this week. This comes after the U.S. shot down what it claimed to be a Chinese spy balloon and other flying objects of unknown origin.
The consumer price index (CPI) data for January will be released by the U.S. Bureau of Labor Statistics later on Tuesday. These numbers should show how well the Federal Reserve’s tightening of policy has worked to keep inflation in check.
A survey of analysts found that they anticipate the headline CPI to increase by 0.5% in January and the core statistic to increase by 0.4% as opposed to 0.3% the month prior. Consumer price inflation decreased to 6.2% annually from 6.5% in December.
The S&P 500 (.SPX) gained 1.2% over the previous night on Wall Street, while the Nasdaq (.IXIC) rallied 1.5% and the Dow Jones (.DJI) rose 1.1%.
Treasury prices stayed mostly the same, and the yield on the benchmark 10-year government bond stayed mostly the same at 3.7073%.
Additionally, two-year bond rates decreased from their three-month highs to float at about 4.5154%, down from the previous close of 4.5340%. After losing 0.3% against its major counterparts in the previous session, the dollar remained subdued in currency markets ahead of the inflation report.
Following a day of gains of 0.8%, it lost 0.2% to 132.13 Japanese yen.
As investors bet that the new governor would eventually stop the yield control strategy, the yields on Japan’s 10-year bonds stayed above 0.5%, which was the top of a range set by the Bank of Japan.
BlackRock Investment Institute downgraded Japanese stocks to “underweight” on Monday. They said that if the Bank of Japan (BOJ) changed its ultra-loose monetary policy, it could raise global yields and make people less willing to take risks.
West Texas Intermediate (WTI) crude in the oil market in the United States slid 1.3% to $79.1, while Brent crude futures eased 1% to $85.77.
Gold increased a little. The spot price of gold was $1,855.59 per ounce.
Also Read: Asian Shares Soar, Dollar Dips ahead of the Fed Policy Decision