Stocks up in Asia, Europe as investors expect inflation in US has cooled down

Shares prices in Asia-Pacific and Europe were higher Thursday as investors look ahead to the US Consumer Price Index (CPI) report later in the day as economists expect inflation to have cooled in December which could signal to the Federal Reserve that previous interest rates hikes have had their intended effects.

Australia’s S&P/ASX 200 closed 1.18 percent up at 7,280.4 after the release of the country’s November trade balance.

The Nikkei 225 closed flat to stand at 26,449.82 while the Topix climbed 0.36 percent to 1,908.18. South Korea’s Kospi edged up 0.24 percent to 2,365.1 while the Kosdaq dipped 0.15 percent to 710.82.

Hong Kong’s Hang Seng index was up 036 percent while mainland China’s Shanghai Composite added 0.05 percent to close at 3,163.45 and the Shenzhen Component was up 0.23 percent to 11,465.73.

Inflation in China up 1.8 percent in December

The CPI in China accelerated 1.8 percent in December compared with a year ago as food prices rose, data from the National Bureau of Statistics showed. “The prices of fresh vegetables and fresh fruits rose by 7.0 percent and 4.7 percent, respectively,” the report said.

The CPI figure was in line with expectations and higher than the previous month’s reading of 1.6 percent but remained flat with November’s, improving from a 0.2 percent decline.

On the other hand, China’s Producer Price Index dipped 0.7 percent in December versus last year, worse than expectations of a 0.1 percent drop.

European markets are in green

European stocks rose to their highest level since May 2022, with market sentiment buoyed by a further reopening of the Chinese economy.

The pan-European Stoxx 600 index was up 0.57 percent in early trade, with telecoms adding 0.9 percent to lead gains as all sectors and major bourses entered positive territory.

By the time this report was being filed, the FTSE was up 0.55 percent, Germany’s DAX 0.50 percent and CAC in France 0.8 percent with a similar trend being witnessed in Amsterdam, Milan, Lisbon and Helsinki.

US stocks are behind this positivity

Stocks at Wall Street rose Wednesday as investors grew increasingly confident that Thursday’s CPI will show cooling inflation.

The Dow Jones Industrial Average closed up 268.91 points, or 0.80 percent, at 33,973.01. The S&P 500 gained 1.28 percent to end at 3,969.61. The Nasdaq Composite led the indexes for another day, adding 1.76 percent, to close at 10,931.67.

Economists polled by Dow Jones expect the CPI to show prices cooled by a modest 0.1 percent in December from the prior month but the forecast still calls for a 6.5 percent increase from the prior year. Excluding food and energy prices, economists expect the CPI for December will be 0.3 percent higher than the prior month and 5.7 percent higher than a year ago.

Wednesday brought the first four-day rally for the Nasdaq since September. The index has climbed this week as investors pick up beaten-down technology stocks, which they expect to fare better if the Fed eases on its rate-hiking campaign.

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