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Asian stocks mixed ahead of key US inflation data

inflation data

Tokyo stock market advanced on a weaker yen, which is nearing the 152 per US dollar level many think could trigger an intervention by Japanese authorities

Asian stocks were mixed Tuesday as attention turned to key US inflation data that could play a pivotal role in the Fed’s decision-making on interest rates, with investors lowering their expectations for how many cuts it will deliver.

With consumer prices rising in January and February, the jobs market still strong and the economy in rude health, traders have regularly tweaked their forecasts for monetary policy easing this year, and some are even contemplating no cuts before 2025.

Stocks soared in New York on Friday after closely watched March non-farm payroll figures came in way above estimates, with traders focusing on the weak wage growth.

But a miss to the upside in this week’s consumer price index report could send shivers through markets, analysts cautioned.

This upcoming release is arguably the most critical economic print of the year, said Stephen Innes at SPI Asset Management.

He said: Investors eagerly await this report in hopes that it will offer more insights into the Fed’s potential timeline for rate cuts and the frequency of such cuts.

Chris Larkin at E*Trade from Morgan Stanley said: While the Fed was hesitant to read too much into back-to-back months of higher-than-expected inflation data, a third month may lead them to change their tune.

Investors are now expecting around 60 bps of cuts this year – suggesting just two cuts – with a less than 50% chance of three, per Bloomberg News.

Nevertheless, the Fed’s Chicago chief Austan Goolsbee cautioned that not loosening monetary policy could backfire.

Tokyo advanced on a weaker yen, which is nearing the 152 per US dollar level many think could trigger an intervention by Japanese authorities.

Hong Kong, Sydney, Singapore and Taipei were also in positive territory, but Shanghai, Seoul and Wellington slid.

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