## Asian Equities Rebound Amid Cooler US Inflation, Global Trade Uncertainty
Asian equities experienced a notable rebound on Thursday, driven by a softer-than-expected US inflation report that helped Wall Street recover from two consecutive days of significant losses. The positive sentiment was reflected in rising shares in Japan and South Korea, while Hong Kong and China saw mixed results. Equity-index futures for US stocks also climbed in early Asian trading, bolstering the previous session’s gains. Despite these advances, the S&P 500 and Nasdaq 100 remained over 3% lower for the week.
### Key Market Movements
– **US Inflation Data**: The Consumer Price Index (CPI) and a separate measure excluding food and energy prices both rose by 0.2% in February, beating the consensus forecast of 0.3%. This better-than-expected outcome is a positive sign, especially considering the potential for tariffs to increase costs for American households.
– **Treasuries and Yields**: Treasuries saw minimal movement following the inflation report, with the US 10-year yield rising three basis points to 4.3% and the policy-sensitive two-year yield climbing four basis points. Major currencies held steady, with the dollar index showing little change.
– **Global Trade Tensions**: The muted response in Treasuries highlighted ongoing uncertainty due to President Donald Trump’s trade policies. Christina Woon, a portfolio manager at Eastspring Investments, noted that volatility is being fueled by frequent news from the US and China, shifting investor focus towards Asia and China.
– **US Stocks**: Mega-cap tech stocks led the US equity gains, with the “Magnificent Seven” group rising 2.3%, its best performance since January. Intel Corp. announced Lip-Bu Tan as its new CEO, while Adobe Inc. provided a cautious outlook.
– **Commodities and Currencies**: Gold remained stable at around $2,934 per ounce, while West Texas Intermediate crude extended its gains. The yen was steady, and major currencies held within tight ranges.
### Market Insights
The Federal Reserve is unlikely to alter its policy stance soon due to the uncertain inflation outlook, influenced by trade developments. A forthcoming report on US producer prices will offer further insights into the Fed’s favored inflation gauge.
As global trade tensions escalate, with the US responding to EU countermeasures and Canada imposing tariffs on US products, investors remain cautious. The yen’s stability reflects the Bank of Japan’s reluctance to intervene in the bond market despite high yields.
### Key Events This Week
– **Eurozone Industrial Production**: Thursday
– **US PPI and Initial Jobless Claims**: Thursday
– **US University of Michigan Consumer Sentiment**: Friday
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