US inflation numbers boost equities; Asia stocks down
Saturday, March 15, 2008
A BENIGN reading of US inflation yesterday lifted the mood of financial markets, US Treasuries and stocks in Europe and the United States as futures traded higher before the opening.
Stocks were seen adding to gains as plans emerged for a financing for troubled US brokerage firm Bear Stearns.
Favourable inflation data, which showed underlying inflation was unchanged in February, boosted chances for a big interest rate cut when Federal Reserve policy-makers meet next week to spur the flagging US economy.
Meanwhile, Asian stocks closed mostly down yesterday due to concerns about the US economy, a sliding greenback, near record high oil prices and the debilitating global credit crunch.
Japan, the region's biggest bourse, slipped 1.54 per cent as fears grew that the yen's strength against the ailing greenback would hit the country's export performance.
Elsewhere, South Korea fell 1 per cent, while Hong Kong, China and Taiwan also ended down.
Before the US inflation numbers were released, world financial markets had stabilised after a week of turbulence, with the US dollar inching up from historic lows and European stocks holding steady.
The US dollar rose against the yen and US Treasury debt prices extended gains following the release of data that had been expected to show overall prices would rise 0.3 per cent and core prices would be up 0.2 per cent.
Cheaper energy helped keep overall consumer prices as well as vital core prices in check in February, the Labor Department said.
"This is a huge downside surprise (in inflation measures)," said Ken Landon, a foreign exchange strategist with JPMorgan Chase in New York. "This gives further support for the Fed to cut rate more aggressively."
European shares rose 1 per cent, led by banks and miners, and US stock futures rose on the inflation news, which eased concerns the US economy was heading toward a period of low growth and high inflation.
Oil slipped below US$110 as investors took profits after prices hit a record US$111 on Thursday, but the depressed dollar was seen limiting losses.
US crude for April delivery fell 47 cents to US$109.86 a barrel after it touched a record for the seventh time in a row in the previous session.
Reuters, AFP
Stocks were seen adding to gains as plans emerged for a financing for troubled US brokerage firm Bear Stearns.
Favourable inflation data, which showed underlying inflation was unchanged in February, boosted chances for a big interest rate cut when Federal Reserve policy-makers meet next week to spur the flagging US economy.
Meanwhile, Asian stocks closed mostly down yesterday due to concerns about the US economy, a sliding greenback, near record high oil prices and the debilitating global credit crunch.
Japan, the region's biggest bourse, slipped 1.54 per cent as fears grew that the yen's strength against the ailing greenback would hit the country's export performance.
Elsewhere, South Korea fell 1 per cent, while Hong Kong, China and Taiwan also ended down.
Before the US inflation numbers were released, world financial markets had stabilised after a week of turbulence, with the US dollar inching up from historic lows and European stocks holding steady.
The US dollar rose against the yen and US Treasury debt prices extended gains following the release of data that had been expected to show overall prices would rise 0.3 per cent and core prices would be up 0.2 per cent.
Cheaper energy helped keep overall consumer prices as well as vital core prices in check in February, the Labor Department said.
"This is a huge downside surprise (in inflation measures)," said Ken Landon, a foreign exchange strategist with JPMorgan Chase in New York. "This gives further support for the Fed to cut rate more aggressively."
European shares rose 1 per cent, led by banks and miners, and US stock futures rose on the inflation news, which eased concerns the US economy was heading toward a period of low growth and high inflation.
Oil slipped below US$110 as investors took profits after prices hit a record US$111 on Thursday, but the depressed dollar was seen limiting losses.
US crude for April delivery fell 47 cents to US$109.86 a barrel after it touched a record for the seventh time in a row in the previous session.
Reuters, AFP
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