Asian shares held near seven-month highs on Thursday, though traded mostly sideways as investors awaited fresh catalysts to clarify further the global interest rate easing cycle.
Japan’s Nikkei, a key indicator for Asian markets, was headed for a fourth successive day of loss – its longest losing streak in about five months. This trend is primarily attributed to the potential policy pivot from the Bank of Japan (BOJ) meeting next week, a development investors should be prepared for.
MSCI’s broadest index of Asia-Pacific shares outside Japan changed little and strayed not too far from a seven-month peak in the previous session as traders shrugged off higher-than-expected US inflation rate data.
Attention now turns to the crucial producer price data in the world’s largest economy due later on Thursday, a critical indicator that feeds into the core personal consumption expenditures (PCE) price index. This data is of significant importance for investors and financial professionals.
The core PCE index is the US Federal Reserve’s preferred measure of inflation.
Retail sales figures for February are also due later in the day. This comes ahead of the highly anticipated Fed policy meeting next week. The focus will be on clues as to how soon policymakers could commence their rate-easing cycle, a decision that could significantly impact the global economy.
“Since the FOMC (Federal Open Market Committee) last met, the US inflation data have come in a bit stronger than expected, while the labor market generally has remained resilient,” said economists at Wells Fargo in a client note.
“With payroll growth still solid and inflation proving to be a bit stickier recently, we suspect the FOMC will still seek greater confidence at the end of its meeting next week that inflation is headed back to 2% on a durable basis.”