Market update: Asia gains momentum ahead of US CPI report

Asian markets saw positive momentum as investors anticipated a potential slowdown in US inflation, influencing the Federal Reserve’s future decisions. China’s sovereign wealth fund’s move to acquire shares in major banks added to the positive sentiment.

MSCI’s Asian equity index marked its sixth consecutive day of gains, with Japan and South Korea experiencing approximately a 1% increase in stock benchmarks. The Hang Seng Index surged by as much as 2.2% after China’s state-owned Central Huijin Investment Ltd. boosted its holdings in the country’s largest banks, a move not seen since 2015. However, oil prices declined for the third consecutive day, erasing Monday’s surge triggered by Hamas’ attack on Israel.

Attention now shifts to Thursday’s release of US consumer price data, with economists predicting a further moderation in inflation. Wednesday’s published Fed minutes indicated consensus among officials that a restrictive policy stance should be maintained, while acknowledging the need to balance against potential over-tightening, which could impede the downward trajectory of inflation.

According to a Bloomberg survey, US CPI is expected to have eased to an annual rate of 3.6% in September, down from the previous month’s 3.7%. Wednesday’s data revealed higher-than-anticipated producer prices in September, driven by increased energy costs.

US stock futures extended their gains following the S&P 500’s four-day winning streak, the longest since August, supported by comments from Fed officials.

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Boston Fed President Susan Collins emphasized a more patient approach now that rates are at or near their peak, while Atlanta Fed President Raphael Bostic stated that the central bank need not continue tightening unless inflation’s descent falters.

The dollar saw a slight dip against most of its Group-of-10 peers, while the yen remained close to 149 against the greenback. Meanwhile, Treasury 10-year yields remained relatively stable at 4.57%, after reaching a two-week low of 4.54% on Wednesday.

West Texas Intermediate oil steadied around $83 a barrel after Wednesday’s decline, possibly influenced by a New York Times report suggesting Iran may have been caught off guard by the assault. Gold prices remained relatively unchanged.

In other news, Adani Ports & Special Economic Zone, a part of Indian billionaire Gautam Adani’s conglomerate, which faced criticism from a US short seller earlier this year, announced the conclusion of its offer to repurchase its 2024 dollar bonds after receiving more bids than initially targeted. The company reported receiving notes totaling $213 million by its October 11 initial deadline, as per an official statement.