Asian stocks rise, dollar drifts lower on Wednesday

Asian stocks rose and the US dollar dipped on Wednesday as investors awaited a crucial consumer price report that could influence the Federal Reserve’s policy path, as reported by Reuters.

MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.65 per cent to a fresh 15-month high, extending its gains to four per cent so far this month. Japan’s Nikkei advanced 0.58 per cent.

The sentiment was buoyed by Federal Reserve Chair Jerome Powell’s comments on Tuesday, downplaying concerns about “hot” inflation after mixed US producer price data. Powell’s reassurance that a rate hike is unlikely further lifted investor spirits.

However, expectations for aggressive US rate cuts this year have been tempered by persistent inflation. Investors are now pricing in only 43 basis points of easing in 2024, compared to initial projections of 150 bps.

All eyes are now on today’s US consumer price report (1230 GMT), with forecasts suggesting a 0.3 per cent month-on-month rise in April’s CPI, down from 0.4 per cent the previous month.

Meanwhile, the Nasdaq hit a record closing high on Tuesday, and the S&P 500 and Dow also gained. Retail favourites GameStop and AMC soared overnight on renewed chatter about potential meme stock frenzy.

In contrast, Chinese stocks faltered, with the blue-chip index down 0.27 per cent, pressured by fresh US tariffs on Chinese goods.

The US dollar weakened as traders awaited the CPI report. The euro reached a fresh one-month high of $1.0828, while the dollar index fell to 104.97.

Oil prices hiked on concerns about wildfires in Canada’s oil sands and anticipation of a drawdown in US crude oil and gasoline inventories. US crude rose 0.68 per cent to $78.55 per barrel, and Brent was at $82.87 per barrel, up 0.59 per cent.

Spot gold prices remained relatively unchanged at $2,356.64 per ounce.