Hong Kong/Tokyo (Reuters) – Asia’s stock markets went up slightly on Wednesday, while the euro was just above parity with the dollar. Investors were waiting for a highly anticipated U.S. inflation report later in the day.
Before the European markets opened on Wednesday morning, futures were going down. Futures for the FTSE fell by 0.24 percent, while futures for the EuroSTOXX 50 fell by 0.46 percent across the whole region.
MSCI’s broadest index of Asia-Pacific stocks outside of Japan went up by 0.66 percent, ending a streak of two days of losses. The day before, it had dropped to its lowest level in two years.
Taiwanese stocks led the gains after Taiwan’s finance ministry said Tuesday night that it would use its stock stabilisation fund. That day, the market hit its lowest point in 19 months. Aero Win Technology Corp, which makes parts for airplanes, did the best today, going up 10%.
The Nikkei in Japan went up 0.37 percent after losing almost 2 percent the day before.
But most of the moves didn’t seem like much before the release of U.S. inflation data for June. Reuters polled economists expect annual inflation to have gone up by 8.8%, which would be a 40-year high.
The U.S. Federal Reserve would probably see a high inflation number as a sign that it needs to keep raising interest rates quickly to stop prices from going up, even if this could send the economy into a recession.
At its last meeting, the Fed raised rates by a huge 75 basis points.
“Sharp (OTC: SHCAY) drops in oil prices in July, on the other hand, suggest that June’s inflation may have been the highest point. If so, a 75bps rate hike on July 27 could be the end of the Fed’s most active tightening phase, “said analysts at ANZ.
“However, we think that 50 bps rate hikes will still be appropriate after the summer because core inflation is strong and real policy rates are still very low.”
South Korea’s central bank raised rates by 50 basis points on Wednesday, which was the biggest increase since the bank started using its current policy system in 1999. New Zealand’s central bank also raised rates by the same amount, which shows how worried people are about inflation around the world.
Fears that higher rates could slow the growth of the world economy have been a major cause of stock market drops this year. On the other hand, the main effect on currency markets has been to make the dollar a safer place to invest.
On Wednesday, the euro was worth $1.00350, and investors were still watching to see if it would fall below one U.S. dollar for the first time since 2002.
It fell to as low as $1.00005 on Tuesday, which was very close.
The dollar was also strong against other currencies, and its index measure against its main rivals stayed steady at 108.27.
In the United States, the benchmark 10-year yield was 2.9724 percent. It had been trading on either side of 3% for the previous week.
Oil prices stopped going down overnight. Brent crude stayed the same at $99.60 per barrel, and U.S. West Texas Intermediate crude was at $95.89 per barrel.
Bitcoin, the most popular cryptocurrency, was up 0.23 percent at $19,478, and appeared to be ending a three-day losing streak.
89, was still trading below a psychologically important mark of $20,000.
