Global markets react: US inflation data spurs concern, UK traders find relief

European equity futures saw a decline following Wall Street’s lead, as hotter-than-anticipated US inflation data raised speculation that the Federal Reserve might delay interest rate cuts. Meanwhile, in the UK, traders received positive news as inflation figures for January came in below forecasts, alleviating concerns about upward price pressures. This prompted the pound to relinquish earlier gains.

Across Asia, stock markets mostly fell, with declines observed in South Korea, Japan, and Australia. However, Hong Kong indexes reversed initial losses upon resuming trading after the Lunar New Year holiday, with attention turning to potential measures from Beijing to stabilize the market. US equity futures showed a modest uptick after substantial drops on Wall Street the previous day.

The yen experienced a slight rebound from its recent decline, with Japan’s top currency official highlighting the rapid movements and readiness of authorities to intervene if necessary. Treasury yields stabilized after a surge on Tuesday, as traders adjusted their expectations for an imminent Fed rate cut following the US inflation data.

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The Golden Dragon index, which tracks US-traded Chinese companies, recorded its largest decline in nearly a month on Tuesday, while Chinese markets remained closed for the Lunar New Year holiday. Expectations for a Fed rate cut before July were tempered, reflected in the decrease in swap contracts referencing Fed policy meetings.

In the UK, consumer prices for January matched those of December, contrary to expectations of a slight increase. In Japan, the issuance of sovereign transition bonds garnered strong interest despite doubts among foreign investors regarding the bonds’ environmental credentials. Sony Group Corp. announced plans to list its financial arm in 2025, signaling a significant capital injection.

Meanwhile, in Hong Kong, shares of WuXi AppTec Co. and WuXi Biologics (Cayman) Inc. declined as US lawmakers called for a formal investigation into the companies, potentially leading to sanctions. On a positive note, Meituan shares rose following reports of a significant year-on-year increase in offsite meal orders during the Lunar New Year holidays.

Oil prices dipped slightly after a mixed US inventory report while contrasting outlooks for the global crude market were presented by OPEC and the IEA. Gold traded within a narrow range after dropping below $2,000 an ounce for the first time in two months, while Bitcoin hovered near the $50,000 mark.