Asian markets struggle as focus turns to US inflation

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Investors are looking ahead to the release of key US inflation data later in the week.
Photo: Daniel ROLAND / AFP
Source: AFP

Asian markets struggled Tuesday to track another record day on Wall Street, with traders now awaiting the release of US inflation data that could dictate Federal Reserve policy in coming weeks.

The tepid performance came after a hot couple of weeks on trading floors fuelled by optimism over an easing of US monetary policy.

Last week’s interest rate cut came with Fed forecasts for two more before the end of the year as officials aim to shore up the stuttering labour market despite elevated inflation.

That puts in focus Friday’s report on personal consumption expenditures, the Fed’s preferred measure of inflation.

With trade subdued by a holiday in Japan and an approaching storm in Hong Kong, Asian markets drifted.

Hong Kong and Shanghai slipped with Manila and Wellington, while Sydney, Seoul, Singapore and Jakarta rose.

Taipei jumped more than one percent with chip titan TSMC soaring nearly three percent as it tracked US counterpart Nvidia, which announced a $100 billion investment in OpenAI for next-generation artificial intelligence.

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However, there are growing worries that the surge may have gone too far and markets are due a pull-back with eyes on a possible government shutdown in Washington.

Senators failed to pass a stopgap funding bill Friday after the Republican-controlled House of Representatives narrowly passed it.

The bill was shot down by Democrats and with both chambers scheduled to be in recess next week, time is running out to keep the government running after the end of the fiscal year September 30.

A shutdown would see non-essential operations start to grind to a halt and hundreds of thousands of civil servants temporarily left without pay.

“There are rickety bridges ahead. The US government shutdown drama remains unresolved—another potential rockslide on the tracks,” said SPI Asset Management’s Stephen Innes.

“The Senate’s failure to bridge the gap between competing proposals leaves traders watching the Sept. 30 deadline with one eye, even as the other scans record-high tickers.