Monday opened with stocks going up in Tokyo.
12 September 2022, 8:41 a.m. Hong Kong (AFP) — Asian markets opened higher on Monday, building on the momentum of last week’s gains in the United States and Europe.This is because investors are pricing in the possibility of more interest rate hikes to control inflation.
Stocks in Japan, Australia, Singapore, Taiwan, and Jakarta went up, but markets in Hong Kong, China, and South Korea were closed because of a holiday.
The euro kept going up against the dollar as investors in Europe thought about the possibility that the European Central Bank (ECB) would raise key rates like the US Federal Reserve.
Related: After mixed trade data, Chinese stocks fall and Asian markets also go down.
On Sunday, the head of the German central bank, Joachim Nagel, said that the ECB would probably keep raising interest rates to stop inflation from getting out of control.
Nagel said that Europe’s inflation could reach a high of more than 10% in December.
Last week, the ECB made history by raising the key rate by 75 basis points, and the markets expect a similar increase at a meeting in October.
This week, investors all over the world will be paying close attention to the US inflation data for August, which will be released on Tuesday. The consumer price index (CPI) is expected to drop slightly to 8%, which is still well above the Fed’s 2% goal.
Traders think that the Fed will raise interest rates again next week by a large amount. The Fed has already raised rates by 75 basis points twice.
A strategist at Saxo Capital Markets named Charu Chanana told Bloomberg Television, “A downside surprise in US CPI is likely more of a worry, and that could cause the dollar to weaken even more.”
“We saw some signs of that at the end of last week. That could be a risk to keep an eye on, especially this week.”
– Hopes for a “soft landing” –
On Sunday, US Treasury Secretary Janet Yellen said she hoped the US economy could avoid a recession, but that the Fed would need to manage interest rates well and also have “some good luck” to achieve what is sometimes called a “soft landing.”
She told CNN, “My hope is that we’ll have a soft landing, but Americans know it’s important to bring down inflation, and in the long run, we can’t have a strong job market if inflation is out of control.”
Yellen said that even though the growth rate of the US economy was slowing, the job market was still “exceptionally strong,” with almost two openings for every job seeker.
Traders will pay close attention to the UK CPI on Wednesday, the European CPI on Thursday, and China’s home sales, retail sales, and industrial production on Friday.
On Monday, stocks opened higher in Tokyo. Last week’s gains and a weaker yen made people feel good about the market.
Related: Asian markets go up on rumours that Biden might roll back some tariffs on China.
In early Asian trading, one dollar was worth 142.65 yen, compared to 142.56 yen on Friday in New York.
“A cheaper yen is good for corporate performance,” said Rakuten Securities’ chief strategist Masayuki Kubota, despite recent news stories that focus on the bad things about the weak yen.
On Friday, the head of the Bank of Japan, Haruhiko Kuroda, met with Prime Minister Fumio Kishida. He said that the rapid drop in the value of the yen was “undesirable,” which could be a sign that something will be done soon to stop the drop.
