# Stocks becalmed before potential CPI storm
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-01-12
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Asian Stocks Hover Near Seven-Month Highs as Investors Await
Meta Description: Asian stocks remain near seven-month highs as investors await U.S. data on inflation. Yen strengthens on reports Japan will review ultra-easy policy. Stay
URL: https://financedigest.com/stocks-becalmed-before-potential-cpi-stormhtml

By Tom Westbrook

SINGAPORE (Reuters) – Asian stocks hovered below seven-month highs on Thursday, as investors waited to see whether U.S. data will confirm inflation is in retreat, while the [yen rose with a report Japan will next week review the side-effects of its ultra-easy policy](https://www.financedigest.com/yen-trims-gains-as-possible-next-boj-governor-says-current-policy-appropriate.html "Yen trims gains as possible next BOJ governor says current policy appropriate").

Following gains for Wall Street indexes overnight, MSCI’s broadest index of Asia-Pacific shares outside Japan climbed to a seven-month high in morning trade, before easing back to flat by lunchtime in [Hong Kong](https://www.financedigest.com/hong-kong-finance-official-to-make-first-visit-to-britain-in-three-years.html "Hong Kong finance official to make first visit to Britain in three years").

Japan’s Nikkei was steady, as were S&P 500 futures. [European futures](https://www.financedigest.com/analysis-inflows-into-unloved-european-telecoms-signal-brighter-future.html "Analysis-Inflows into unloved European telecoms signal brighter future") rose 0.4%. Bonds held overnight gains and the U.S. [dollar was pinned near a seven-month low at $1.0769 per euro](https://www.financedigest.com/euro-rises-after-spanish-cpi-dollar-slips-towards-8-mth-low.html "Euro rises after Spanish CPI, dollar slips towards 8-mth low").

Due at 1330 GMT, economists [expect the rise in core](https://www.financedigest.com/ericssons-quarterly-core-profit-misses-expectations.html "Ericsson’s quarterly core profit misses expectations") U.S. [consumer prices](https://www.financedigest.com/analysis-to-raise-prices-or-not-consumer-goods-makers-weigh-bets-on-buyer-strength.html "Analysis-To raise prices or not? Consumer goods makers weigh bets on buyer strength") slowed to an annual pace of 5.7% in December, from 6% a month earlier. Month-on-month headline [inflation is seen](https://www.financedigest.com/euro-zone-inflation-seen-just-above-ecbs-target-in-2025-poll-shows.html "Euro zone inflation seen just above ECB’s target in 2025, poll shows") at zero.

The hope is that falling inflation reduces the need for interest [rate hikes](https://www.financedigest.com/uk-economys-unexpected-bounce-spurs-more-boe-rate-hike-talk.html "UK economy’s unexpected bounce spurs more BoE rate hike talk"), and markets have priced better-than-even odds that the Federal Reserve slows its cracking pace and hikes by 25 basis points, rather than 50, at next month’s meeting.

(It) is the CPI [number that could help settle the debate for the February meeting,” said NatWest Markets’](https://www.financedigest.com/why-smes-are-the-number-one-market-opportunity-in-digital-banking.html "Why SMEs are the number one market opportunity in digital banking") U.S. [rates strategist Jan](https://www.financedigest.com/italy-jan-jobless-rate-edges-up-to-7-9-with-35000-jobs-created.html "Italy Jan jobless rate edges up to 7.9%, with 35,000 jobs created") Nevruzi.

“We expect a below consensus CPI print, which if it materialises, could push this rally even further.”

Boston Federal Reserve [bank leader Susan Collins also helped things](https://www.financedigest.com/5-things-to-consider-when-choosing-a-challenger-bank.html "5 Things to Consider When Choosing a Challenger Bank"), remarking to the New York Times that she was leaning towards a 25 basis point hike.

Optimism for a more benign [rates outlook and a pickup in demand as China emerges from strict COVID restrictions also drove oil prices sharply higher](https://www.financedigest.com/powells-warning-on-higher-u-s-rates-pushes-dollar-to-3-mth-high.html "Powell’s warning on higher U.S. rates pushes dollar to 3-mth high") to one-week peaks. \[O/R\]

Brent crude [futures topped](https://www.financedigest.com/six-top-tips-on-saving-for-the-future.html "Six top tips on saving for the future") $83 on Thursday. U.S. [Treasuries added a little to overnight gains](https://www.financedigest.com/wall-street-gains-treasury-yields-rise-as-debt-ceiling-talks-progress.html "Wall Street gains, Treasury yields rise as debt ceiling talks progress"), with benchmark 10-year yields down 3.7 bps to 3.5189% and 30-year yields down 4.4 bps to 3.6375%.

European [rate expectations also pulled back](https://www.financedigest.com/bank-of-englands-mann-doubles-down-on-backing-for-rate-hikes.html "Bank of England’s Mann doubles down on backing for rate hikes") a little.

[CHINA HOPES](https://www.financedigest.com/european-shares-rally-as-china-stimulus-lifts-recovery-hopes.html "European shares rally as China stimulus lifts recovery hopes")

Along with hopes for gentler central banks in the West, [investors are also banking](https://www.financedigest.com/stocks-rise-after-bank-sale-fuels-investor-risk-appetite.html "Stocks rise after bank sale fuels investor risk appetite") on a recovery in China to help global growth and are eyeing a potential policy shift in Japan.

The Bank of Japan stunned markets last month by widening the band around its 10-year [bond yield](https://www.financedigest.com/wall-st-stocks-fall-bond-yields-rise-as-china-drops-quarantine-rule.html "Wall St stocks fall, bond yields rise as China drops quarantine rule") target, a move that triggered a sudden rise in yields and a jump in the yen.

On Thursday Japan’s Yomiuri newspaper reported the [BOJ will review of the side-effects of Japan’s ultra-easy settings sooner than expected at next](https://www.financedigest.com/japanese-yen-gains-as-ueda-set-to-be-named-next-boj-governor.html "Japanese yen gains as Ueda set to be named next BOJ governor") week’s policy meetings, and that it may take additional steps to correct distortions in the yield curve.

This likely refers to the fact that 10-year yields have been stuck at the new ceiling of 0.5% for four sessions, even while the [BOJ has been busy buying bonds](https://www.financedigest.com/aussie-dollar-firm-as-bonds-tumble-yen-looks-past-boj.html "Aussie dollar firm as bonds tumble, yen looks past BOJ") in bulk to get them down.

The yen rose about 0.8% in otherwise quiet [currency trade](https://www.financedigest.com/currency-trading-in-a-spin-after-polish-explosion.html "Currency trading in a spin after Polish explosion") to 131.47 per dollar. Ten-year Japanese [government bond futures fell to almost](https://www.financedigest.com/governments-intervene-almost-half-european-venture-capital-investments.html "Governments intervene in almost half of all European venture capital investments") eight-year lows.

Foreign exchange markets were elsewhere holding their breath ahead of CPI data while [China’s reopening kept a bid](https://www.financedigest.com/analysis-no-china-no-deal-bid-to-break-sovereign-debt-logjams-gets-weary-thumbs-up.html "Analysis-No China, no deal: Bid to break sovereign debt logjams gets weary thumbs up") under Asia’s currencies. The [yuan traded near five-month highs at 6.7564 per dollar](https://www.financedigest.com/dollar-slips-yuan-gains-on-china-pmi-hot-inflation-lifts-euro.html "Dollar slips, yuan gains on China PMI; hot inflation lifts euro"). The Aussie held above $0.69.

China on Thursday [reported consumer price falls in December and a larger-than-expected drop in factory gate prices – underscoring the weakness in demand that investors](https://www.financedigest.com/influx-of-one-time-investors-swapping-stocks-for-bricks-and-mortar-reports-agency.html "Influx of ‘one-time’ investors swapping stocks for bricks and mortar reports agency") are betting will recover over the coming months.

It’s not enough for China to [come out of COVID to really turn the whole world](https://www.financedigest.com/whats-coming-next-in-the-clearing-and-settlement-world.html "What’s coming next in the clearing and settlement world?") economy around,” said Steven Wieting, chief investment strategist and chief economist at Citi Global Wealth Investments. “But it really weighs in the opposite direction.”

[Inflation data is also due in India later](https://www.financedigest.com/wall-st-seen-steady-ahead-of-inflation-data-fed-later-in-week.html "Wall St seen steady ahead of inflation data, Fed later in week") on Thursday, where hopes are it will steady below 6%.

(This story has been refiled to add a dropped word in the first paragraph)

(Editing by Lincoln Feast)


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