Asian markets experienced a positive trading session on Wednesday as they followed the rally on Wall Street. This surge in optimism was fueled by the release of data showing a modest rise in US inflation, which boosted hopes that the US Federal Reserve would maintain interest rates at their current levels.
The positive inflation data had an immediate impact on US stocks, with the S&P 500 and Nasdaq reaching new one-year highs. The Nasdaq, which is heavily focused on technology companies, has seen a remarkable increase of almost 30% year-to-date. Similarly, the benchmark S&P 500 has rebounded approximately 22% from its closing low in October 2022. The surge in stock prices was largely driven by gains in major companies such as Apple Inc, Nvidia Corp, and Tesla Inc.
In Europe, the pan-European STOXX 600 index also experienced a modest increase of 0.3%. The UK’s FTSE 100 rose by 0.3% to reach 7,594.78, while Germany’s Frankfurt DAX saw a more significant gain of 0.8% to reach 16,230.68. France’s CAC 40 also joined the positive trend, adding 0.6% to reach 7,290.80.
Looking ahead, the European Central Bank (ECB) is scheduled to hold its policy meeting on Thursday. It is widely anticipated that the ECB will raise interest rates by an additional 25 basis points in an effort to curb inflationary pressures.
Meanwhile, the energy market saw a decline in crude oil prices following the release of industry data indicating an unexpected increase in US crude stocks, which signaled weak demand. Brent crude futures fell by 0.26% to reach $74.10 a barrel, while US West Texas Intermediate (WTI) crude dropped by 0.32% to reach $69.20 a barrel.
In the currency market, the US dollar weakened, approaching a three-week low against the euro and a one-month low versus sterling. This depreciation was driven by the soft US inflation data. The dollar index, which measures the currency against six major peers, remained relatively stable at 103.29 after briefly dipping to its lowest level since May 22 overnight at 103.04.
Specifically, sterling edged 0.08% lower against the dollar to reach $1.2602, while the dollar eased 0.16% against the yen, reaching 140.02 yen. The Australian dollar remained flat at $0.6768.
In summary, Asian markets traded positively on Wednesday, following a rally on Wall Street spurred by encouraging US inflation data. The surge in stock prices, particularly in technology-heavy indices such as the Nasdaq, contributed to overall market optimism. European markets also experienced modest gains, with expectations of an interest rate hike by the European Central Bank. However, the energy market saw a decline in crude oil prices due to an unexpected rise in US crude stocks, while the US dollar weakened against major currencies following the release of soft inflation data.
