Asian equities rose on Thursday following a softer-than-expected US inflation report, which helped Wall Street recover from two consecutive days of significant losses.
Markets React to US Inflation Data
Shares in Japan and South Korea posted gains, while markets in Hong Kong and China showed mixed results. In early Asian trading, equity-index futures for US stocks climbed, extending the positive momentum from the previous session. Despite the gains on Wednesday in the S&P 500 and Nasdaq 100, both indices remained more than 3% lower for the week.
Treasuries saw little movement on Thursday, reflecting a muted response to the inflation data released the previous day. The US 10-year yield rose by three basis points, reaching 4.3%, while the policy-sensitive two-year yield climbed by four basis points. Major currencies remained relatively unchanged, with the US dollar index also seeing minimal movement.
The lack of significant market reaction to the inflation report in Treasuries highlighted the broader uncertainty surrounding global markets, with President Donald Trump’s trade policies continuing to impact sentiment.
Rising Volatility and Uncertainty
Christina Woon, portfolio manager at Eastspring Investments, noted that constant news from the US and China has been fueling market volatility. She observed that the once-dominant view of US economic exceptionalism is gradually eroding, shifting investor sentiment more favorably toward Asia and China.
US consumer prices, including a core measure that excludes food and energy, both increased by 0.2% in February, lower than the 0.3% consensus forecast. This positive outcome suggests that the inflationary pressure from potential tariffs on American households may be more contained than initially feared.
However, analysts Oscar Munoz and Gennadiy Goldberg from TD Securities cautioned that while the latest inflation data is encouraging, uncertainties remain due to ongoing trade policy developments. They believe the Federal Reserve is unlikely to alter its policy stance in the near future.
Trade Tensions Escalate
Further developments in US trade policies also weighed on global markets. President Trump announced plans to respond to the European Union’s countermeasures against his 25% tariffs on steel and aluminum, heightening the risk of further escalation in the global trade war. Earlier in the day, Canada imposed new tariffs on US-made products, including steel and aluminum, following the Trump administration’s global tariffs on these materials.
Data to Watch in Asia
In Asia, key economic data releases are anticipated, including consumer confidence figures from Thailand, industrial production and producer price data from Hong Kong, and trade data from India, which may be released before March 17. China is also expected to release money supply data by March 15.
US Stocks and Tech Rally
In the US, stocks were boosted by gains in mega-cap technology stocks. The so-called “Magnificent Seven” group of tech stocks rose by 2.3%, marking its best day since January. Intel Corp. announced that it had appointed industry veteran Lip-Bu Tan as its new CEO, while Adobe Inc. gave a lukewarm outlook for the future.
Jonathan Krinsky, chief market technician at BTIG, noted that stocks had rebounded from an “extreme oversold” condition over the past week, suggesting a potential short-term bottom, though he does not see it as the final bottom.
Other Global Developments
In China, authorities summoned Walmart Inc. executives over reports that the retailer had asked suppliers to absorb the rising costs from increased US tariffs. Meanwhile, the Japanese yen remained steady, and the Bank of Japan signaled it was unlikely to intervene in the bond market despite the benchmark yield hitting its highest level since 2008.
In commodities, gold prices remained stable at around $2,934 per ounce, while West Texas Intermediate oil extended its gains into a third consecutive session.
The latest market developments suggest that while global equities are showing some resilience, ongoing trade tensions and uncertainties continue to present challenges for investors.
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