Asian markets struggle to match Wall St as inflation data looms

Markets were mixed in Asia on Tuesday, with investors awaiting the release of key US inflation data later in the day that could play a big role in the Federal Reserve's keenly anticipated interest rate decision.

Expectations are for the US central bank to hold fire at the end of its meeting Wednesday -- after 10 straight hikes -- as data suggested the economy remained healthy but was showing signs that the tightening measures are kicking in.

Analysts said bets are on a pause for another increase next month, though they warned that a forecast-busting reading on the consumer price index could force officials to keep lifting.

Optimism that borrowing costs will be held -- traders have priced in a 20 percent chance of a hike -- has helped push stocks higher this month, with the S&P 500 now in a bull market, having risen 20 percent from its October lows.

Read also

Asian traders tread cautiously ahead of Fed rate decision

"The committee is expected to skip the June meeting but still pair that with hawkish communications to counter any sense that a June pause trumpets the end of their hiking campaign," said SPI Asset Management's Stephen Innes.

"However, a big upside surprise in today's CPI could move the rate hike needle for June up to and above 50-50."

After a strong performance on Wall Street, Asia struggled to pick up the baton.

Tokyo, Seoul, Wellington and Taipei rose but Hong Kong, Shanghai, Sydney, Singapore, Manila and Jakarta were in negative territory.

The Fed decision comes as central banks around the world continue to struggle in their battle against inflation, which remains well above their two percent targets.

The European Central Bank is expected to unveil another increase Thursday despite the eurozone dipping into recession, while the Bank of Japan is tipped to stand pat when it meets Friday.

Read also

Asian markets rise on revived hopes for a Fed rate pause

Canada and Australia announced increases last week.

But China on Tuesday announced a small cut in its short-term lending rates as authorities try to kickstart a recovery in the economy, which has run out of steam after an initial burst seen after the lifting of zero-Covid restrictions.

The move comes after figures showed inflation remained subdued and saw the yuan drop against the dollar.

China's ongoing problems remained a weight on the crude market as investors fret over the impact on demand, even after Saudi Arabia's surprise decision to slash output by a million barrels a day next month.

WTI is down about 15 percent this year Brent has lost around 13 percent.

Both contracts edged up Tuesday but made little headway into the four percent losses suffered the day before as Goldman Sachs slashed its price forecast for the third time in six months.

Key figures around 0230 GMT

Read also

Asian markets turn lower on fresh rate hike worries

Tokyo - Nikkei 225: UP 1.6 percent at 32,946.49 (break)

Hong Kong - Hang Seng Index: DOWN 0.6 percent at 19,296.53

Shanghai - Composite: DOWN 0.4 percent at 3,217.54

Euro/dollar: UP at $1.0772 from $1.0762 on Monday

Pound/dollar: UP at $1.2522 from $1.2510

Dollar/yen: DOWN at 139.49 yen from 139.56 yen

Euro/pound: UP at 86.04 percent from 86.00 pence

West Texas Intermediate: UP 0.2 percent at $67.26 per barrel

Brent North Sea crude: UP 0.4 percent at $72.11 per barrel

New York - Dow: UP 0.6 percent at 34,066.33 (close)

London - FTSE 100: UP 0.1 percent at 7,570.69 (close)

Source: AFP