Asian Stocks Mixed Ahead of US Inflation Data

Asian stocks traded mixed on Wednesday, with investors awaiting the release of key US inflation data that could influence the pace of market-boosting rate cuts by the Federal Reserve. The producer price index, which measures wholesale inflation, climbed just 0.2% in December, according to the Bureau of Labor Statistics. Economists polled by Dow Jones had estimated a 0.4% rise. Core PPI, which excludes food and energy, came in flat.

The Hang Seng in Hong Kong added 0.2% to 19,264.46, while mainland China's CSI300 — which captures the 300 most traded stocks on Shanghai and Shenzhen Stock Exchanges — fell 0.41% to 3,232.98. The benchmark Nikkei 225 was flat, while the broad-based Topix gained 0.22% to 1,860.17.

The Kospi in South Korea rose 0.3% to 2,502.94, while the small-cap Kosdaq Index lost 0.48% to 774.55. Australia's S&P/ASX 200 gained 0.26% to 8,233.10.

Overnight in the US, the Dow Jones Industrial Average climbed 0.52% to 42,518.28, while the S&P 500 advanced 0.11% to 5,842.91. In contrast, the tech-heavy Nasdaq Composite slipped 0.23% to 19,044.39.



The mixed performance in Asian markets comes as investors assess the potential impact of US inflation data on global markets. The consumer price index, which measures retail inflation, is expected to be released later in the day. Economists polled by Dow Jones expect the CPI to have risen 0.1% in December, with the core CPI, which excludes food and energy, expected to have increased 0.3%.

The US inflation data will be closely watched by investors, as it could influence the Federal Reserve's monetary policy. The Fed has already hinted that it is likely to cut rates just two times in 2025, down from an earlier projection of four. Speculation is growing about whether the Fed may cut rates zero times this year.

Such questions have sent Treasury yields sharply higher in the bond market, which cranks up the pressure on the stock market. Yields slowed their ascent following the update on wholesale inflation.

The yield on the 10-year Treasury held at 4.78%, where it was late Monday. It was below 3.65% in September. The two-year Treasury yield, which more closely tracks expectations for Fed action, eased to 4.36% from 4.39%.

Indexes drifted between gains and losses through the day in large part due to drops for several Big Tech stocks. Nvidia fell 1.1% and was the second-heaviest weight on the S&P 500. The only stock to drag more on the market was Eli Lilly, which fell 6.6% after saying it expects to report weaker revenue for the last three months of 2024 than previously forecast.

Several of the nation's biggest financial companies will report their latest results on Wednesday, including JPMorgan Chase and Wells Fargo, as earnings reporting season gears up. Such reports are always under the spotlight, but companies may be under more pressure to impress this time around. If Treasury yields continue to rise, either stock prices need to fall or companies need to produce bigger profit growth to make up for it.



In other dealings early Wednesday, U.S. benchmark crude oil rose 6 cents to $76.43 per barrel. Brent crude, the international standard, lost 1 cent to $79.91 per barrel. The U.S. dollar fell to 157.91 Japanese yen from 158.00 yen. The euro slipped to $1.0299 from $1.0309.

Investors will be poring over the consumer price index later Wednesday, with analysts warning that a strong reading could even stoke talk of a possible rate hike as the Fed's next move. SWBC's Christopher Brigati wrote in a commentary: "Even prior to the release of the dot plot in December, we've been cautious about the increasing possibility that the Fed would have to dial back further rate cuts in 2025, calling for no cuts during the year. It appears that there is growing sentiment that the Fed will be less accommodating going forward. Furthermore, it is appearing increasingly likely that the Fed's rate-cutting efforts beginning in September may have been premature, given more recent economic data."

Asian stocks are likely to remain volatile ahead of the US inflation data, with investors closely watching the outcome and its potential impact on global markets.