Asian stock exchanges: Hang Seng, Shanghai Composite, and Nikkei 225
Shanghai Composite Index increased by 0.5% while the Nikkei 225 in Tokyo fell by 1%. In the meanwhile, the Hong Kong Hang Seng fell by 0.5%. The Kospi fell by 0.7% in Seoul, while Sydney’s S&P/ASX 200 fell by 0.3%. Stocks fell in New Zealand, Taiwan, and Singapore as well, although they rose in Jakarta.
Concerns about Global Inflation
The Federal Reserve may ease its attempts to rein in corporate activity and hiring if there is signs of diminishing upward pressure on U.S. prices, which traders are hoping to see in the inflation statistics due out on Tuesday. A good reading, though, may support plans to keep rates high and perhaps lead to a possible hike.
A big impact on risk assets might result from high inflation, according to Stephen Innes of SPI Asset Management.
Wall Street Results
The S&P 500 index lost 1.1% this week, which was its worst weekly drop since December, although it still increased by 0.2% on Friday to 4,090.46. The Nasdaq dipped by less than 0.1% to 11,718.12, while the Dow Jones Industrial Average increased by 0.5% to 33,869.27.
Following Powell’s comment that there is still a long way to go before reaching the 2% inflation objective, Wall Street’s prediction of how high the Fed may hike rates has been revised. The uncertainty has also been raised by the U.S. government’s revision of December inflation to 0.1% over the prior month, up from the earlier estimate of a 0.1% fall, and the revised November number.
The data being out on Tuesday is expected to reveal that consumer prices increased by 0.5% in January compared to the previous month.
Bond Yields and Projection of Earnings
While the yield on the two-year Treasury bond increased to 4.50%, nearly reaching its highest level since November, the yield on the 10-year Treasury bond broadened to 3.73% on Friday.
According to Credit Suisse strategists, equity analysts have cut their first-quarter earnings projections for S&P 500 businesses by 4.5% due to the impact of inflation and sluggish economic growth.
Benchmark U.S. crude down 75 cents to $78.97 per barrel on the energy markets, while Brent crude, the benchmark for global oil trade, fell 71 cents to $85.68 per barrel in London.