Asian markets fluctuated Thursday following a tepid performance in New York and Europe as traders fret over the inflation outlook and central bank plans to hike interest rates to tame rampant prices.
Wall Street closed relatively flat following mixed corporate results, and as a Federal Reserve report said that the US economy was “little changed” in recent weeks.
A mixed bag on corporate earnings also provided little motivation for traders, while results from US regional banks is coming into focus after last month’s turmoil in the sector that saw three go under and Credit Suisse taken over.
Markets have in recent days been optimistic that central banks, and particularly the Fed, will be able to wind down their rate hiking drive soon after data showed inflation coming down, even if at a slower pace than wanted.
However, investors were jolted by news that UK prices were still elevated, rising more than 10 percent on-year last month owing to soaring food costs, fanning bets the Bank of England will have to keep tightening monetary policy.
It also showed that inflation remains stubbornly high and that officials still have their work cut out to bring it down.
“Broader markets are likely still in hawkish shock after the hotter-than-hot UK CPI (consumer prices index) brought back into focus that global inflation is proving more difficult to stamp out amid underlying solid demand,” analyst Stephen Innes, of SPI Asset Management, said.
The BoE has hiked rates 11 times since late 2021 in an unsuccessful bid to keep inflation close to a two percent target.
