Asian stock markets may witness slight gains following a tumultuous session on Wall Street. This initial surge was driven by Google’s (GOOGL) announcement of its expansion in the chip manufacturing arena, coupled with several key cloud computing agreements revealed at the start of the Google Cloud event, setting an optimistic tone. The semiconductor industry is anticipated to be a focal point for traders in Asia. This optimistic sentiment was further bolstered by comments from Raphael Bostic, President of the Federal Reserve Bank of Atlanta. He noted that if the US Consumer Price Index (CPI) aligns with projections, it could be interpreted as favourable news for the Federal Reserve, suggesting the possibility of reduced rates sooner if disinflation continues.
The upcoming trading session is expected to be eventful, with crucial data releases, policy statements from the Reserve Bank of New Zealand and the Bank of Canada, insights from several Federal Reserve officials, and the release of the latest Federal Open Market Committee (FOMC) meeting minutes, all preceding important US Consumer Price Index data. Market participants are currently in a neutral stance regarding the US inflation data. However, a significant increase in both the core and headline inflation figures could lead to more aggressive expectations for short-term interest rate hikes and impact the longer end of the US yield curve. This could strengthen the US dollar against major currency pairs and contribute to a shift towards risk-averse investments in emerging market assets. Additionally, investors are eagerly awaiting the latest corporate earnings reports, with several key announcements expected by the end of the week.
