Global markets remained unchanged as investors awaited U.S. consumer inflation data that could alter domestic and international monetary policy.
MSCI’s broadest index for Asia-Pacific shares outside Japan slipped by 0.2% in Asia, while Japan’s Nikkei fluctuated between gains and losses, ultimately finishing 0.3% lower. Markets across the region had mixed outcomes: Tokyo, Sydney, Seoul, Wellington, and Manila all rose, whereas Hong Kong, Shanghai, and Taipei declined.
The notable movement was observed in the Japanese yen and government bond yields. The dollar dropped 0.4% to 157.3 yen, with markets now assigning a 70% probability that the Bank of Japan will raise interest rates in January following Governor Kazuo Ueda’s remarks that such an option would be discussed next week. Concurrently, yields on ten-year Japanese government bonds reached 1.255%—their highest level since 2011.
In the U.S., stock markets experienced volatility on Tuesday. After official data revealed a smaller-than-expected rise in December’s producer prices, U.S. stocks initially edged higher, although these figures did little to change expectations regarding potential interest rate cuts. The S&P 500 increased by 0.1%, the Nasdaq Composite slipped 0.2%, and the Dow Jones Industrial Average climbed 0.5%.
Meanwhile, the dollar weakened against the euro on Tuesday but remained near its highest level in more than two years following the release of cooler-than-expected inflation data.
