Asian currencies climbed modestly on Thursday as data indicated that U.S. consumer prices grew at a little slower-than-expected rate in April, indicating that the Federal Reserve is succeeding in containing rising inflation. However, the regional stock markets were mainly mixed. According to Labour Department data, U.S. consumer prices rose 4.9% in April from a year earlier, compared to estimates of a 5% increase, thus giving cover for the central bank to delay any interest rate hikes. “We believe this is a promising print for the Fed. This news should keep the Federal Reserve comfortable with a hold in June.”
Bank of America analysts said in a note. Hopes of an impending Fed pause boosted risk sentiment in Asian markets, sending the South Korean won and Malaysian ringgit up 0.2% and 0.1%, respectively. Money markets are presently pricing in a 99.7% likelihood that the Fed will leave rates on hold at its next meeting in June, with rate decreases expected to begin in July and continue through the end of the year. Thai investors were wary ahead of the country’s general election on Sunday, with the Thai baht falling 0.3%. Earlier this week, a declaration by Thai billionaire Thaksin Shinawatra, the country’s first democratically elected prime leader to spend a full term—
Plans to return to the nation after 17 years sparked outrage among voters, with consequences for the election and the inevitable horse-trading to establish a government, analysts believe. Equities and currencies in China and Hong Kong fell as the world’s second-largest economy reported slower-than-expected consumer price growth in April, while factory gate deflation intensified. The statistics on Thursday reflected a similarly poor official PMI and illustrate the unevenness of China’s post-COVID economic recovery, implying that further intervention may be required to enhance the economic resurgence. The Shanghai SE Composite Index declined 0.2 percent.
While the Hong Kong benchmark index was down 0.4%, the yuan fell 0.1%. Meanwhile, Indonesia’s stock market lost 1.2%, with losses across energy, consumer goods, and finance. HIGHLIGHTS China and US debt concerns may dominate G7 finance chiefs’ discussions. ECB’s Centeno thinks interest rates at high and might reduce in 2024. South Korea will drop obligatory