Asian markets climbed on Wednesday, lifted by a weaker yen and broad investor optimism ahead of critical inflation readings from Europe and the United States later in the week. The Nikkei 225 surged over 1%, fuelled by continued yen depreciation, while Chinese stocks edged higher amid cautious sentiment. Traders globally are now turning their attention to the European Central Bank’s next moves, UK inflation figures, and revised US GDP data due later today.
In Tokyo, the Nikkei rallied as the yen weakened past 160 to the dollar for the first time since late April, a move that benefits exporters and bolsters Japan’s equity outlook. The currency drop has reignited speculation around potential intervention by Japanese authorities, though markets remain unconvinced that any such move would deliver lasting effects. The broader Topix index also gained, extending the rebound seen in recent sessions.
Shanghai and Shenzhen benchmarks posted modest gains, supported by Beijing’s pledges to further stimulate domestic demand, particularly in the consumer and housing sectors. However, trading volumes were thin, reflecting caution among investors still uncertain about the pace of China’s recovery. Hong Kong’s Hang Seng index dipped slightly, weighed down by tech and property names, despite broader gains in the region.
In South Korea, the Kospi advanced on chip-led momentum after Nvidia shares rose overnight, reinforcing bullish sentiment around semiconductors. Taiwan’s Taiex also performed well, reflecting strong inflows into tech names.
Looking ahead, European markets are expected to open cautiously higher. London’s FTSE 100 is likely to be influenced by UK inflation data, which could determine whether the Bank of England maintains its hawkish stance or considers a summer rate cut. Analysts anticipate a slight decline in core inflation, though sticky services prices may complicate policymaking.
Germany’s DAX and France’s CAC 40 are seen opening flat to modestly up, as investors await signals from the ECB regarding its rate trajectory following a dovish tone earlier this month. Any deviation in forward guidance could rattle bond markets already pricing in two more cuts by year-end.
In the US, equity futures point to a mixed open. Investors will closely analyse the latest GDP revision and personal consumption data, with Friday’s PCE inflation print looming large. The S&P 500 and Nasdaq have rallied in recent sessions on AI-fueled tech enthusiasm, but concerns about overstretched valuations and the Fed’s hesitance to pivot too quickly remain key risks.
Volatility could increase later in the day as central bankers in the US and Europe issue remarks that may influence global rate expectations. With both bond and equity markets delicately balanced, clarity on inflation trends and policy direction will be essential in setting the tone for the second half of the week.
REFH – newshub finance
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