HONG KONG: Markets were mixed on Wednesday after business as usual Inflation in the USA report moderate expectations of interest rate cut early next year, with attention focused on the Federal Reserve's policy statement later in the day.
All three Wall Street indexes ended positively – with the S&P 500 near a three-year high – following news that consumer prices slowed marginally last month, suggesting the central bank is on track in its fight against inflation .
Data showing that core prices remained resilient, however, left traders disappointed and highlighted the battle authorities still face to achieve inflation to your target.
While there is a wide expectation that the bank will cut rates next year, traders now think it will be less than previously suggested and that the first will be a little later.
“Reducing inflation from last year's highs is one thing, getting it to the Fed's 2% target is another,” said Chris Larkin of E*Trade at Morgan Stanley.
“Trends still point to a slowdown in the economy and a cooling of inflation. This means that lower rates are still on the horizon in 2024 – but not as close as some people might hope.”
The Fed's two-day meeting ends on Wednesday and most expect it to hold rates, but its statement and comments from boss Jerome Powell will be scrutinized for hints about its plans for 2024.
Economic forecasts and the bank's so-called dot plot for rate hikes will also be revealed.
The latest numbers follow a series of readings that point to a slowdown in the economy and a cooling in the job market, but at a pace that has not yet sparked concerns about a recession.
Powell and several other Fed officials warned that while the numbers were positive, they would make decisions based on data and keep the door open for another increase if necessary.
“The Fed will want to see additional cooling in labor data before initiating rate cuts and is likely to send a message of patience to markets,” said Franck Dixmier of AllianzGI.
After a strong performance on Tuesday, Asian markets diverged on Wednesday.
Tokyo, Sydney, Wellington and Taipei rose, but Hong Kong, Shanghai, Singapore, Seoul, Manila and Jakarta fell.
Chinese traders were disappointed by a two-day economic meeting between leaders in Beijing.
They have pledged more to support the country's troubled real estate sector as part of plans to lift the world's second-largest economy out of an uneven recovery.
But analysts said there were no new measures and the lack of stimulus frustrated many.
“There were no surprises at the conference,” said Hao Hong of Grow Investment Group.
“Some may be disappointed not to see a specific stimulus package come out of the meeting. The focus on security and risk, as well as high-quality development, naturally implies that at this stage high-quality growth trumps fast growth.”
Oil prices rose slightly but made only a small dent in the nearly four percent loss suffered on Tuesday, which arose due to concerns about rising U.S. production as well as concerns about demand from China due to to its struggling economy.
West Texas Intermediate and Brent are now at their lowest levels since late June.



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