Equities Tread Water Before US CPI, Dollar Steady: Markets Wrap

(Bloomberg) — Asian stocks saw choppy trading while the dollar steadied as traders awaited US inflation data for clues on the path of Federal Reserve policy.

The MSCI Asia Pacific Index trimmed most of its earlier advance, with benchmarks in Hong Kong, South Korea and Japan up less than 0.5%. European equity futures edged higher while contracts for US stocks were little changed. The dollar gauge consolidated after dropping 0.4% in the previous session. 

The consumer price report comes at a crucial time for global markets, after a spate of solid US economic data trimmed Fed rate cut expectations and triggered a debt selloff. Wednesday’s muted moves are in contrast to risk-on gains in Asia in the previous session, when a report that Donald Trump’s incoming team is considering gradual tariff hikes buoyed sentiment.

A hot CPI print will “will translate into a higher dollar and higher rates, meaning general tightening of financial conditions for Asia,” said Kok Hoong Wong, head of institutional equities sales trading at Maybank Securities. “We expect a quieter session today, especially after some larges moves in Japanese and Chinese stocks yesterday.”

Forecasters expect the monthly report on US consumer prices to show a fifth month of firm increases.

The 10-year Treasury yield fell one basis point in Asia. Some bond traders are betting that the relentless selloff in Treasuries will soon lose momentum, in part because of questions around how President-elect Donald Trump’s policies will take shape. Australian bonds slipped.  

The People’s Bank of China pumped a near-historic amount of short-term cash into its financial system on Wednesday, dialing up liquidity support amid a cash squeeze with the new year holiday looming. China’s short-term interbank lending rates dropped. 

The injections show “that the PBOC easing stance has not changed,” said Xiaojia Zhi, economist at Credit Agricole CIB. “The PBOC would need to inject more liquidity via other tools to meet high seasonal liquidity demand” for tax payment and pre-Lunar New Year liquidity, and prevent a surge in interbank rates, she said. 

Elsewhere in Asia, Bank Indonesia is expected to keep its key rate at 6% after it made repeated interventions to stabilize its currency over the past month. 

In South Korea, investigators arrested President Yoon Suk Yeol after launching a pre-dawn operation to bring the impeached leader in for questioning over his short-lived martial law declaration.

Bank Earnings

Eurozone industrial production data is due ahead of the US inflation reading. Wall Street is also gearing up for the unofficial start of the earnings season, with results from big banks hitting the tape on Wednesday. 

Lenders including JPMorgan Chase & Co. and Wells Fargo & Co. are expected to show continued gains from trading and investment banking, which helped offset net interest income declines caused by higher deposits and sluggish loan demand.

In commodities, oil steadied after dropping by the most in more than a month as the impact of US sanctions against Russian flows continued to reverberate. 

Key events this week:

• Eurozone industrial production, Wednesday
• Citigroup, JPMorgan, Goldman Sachs, Bank of New York Mellon, Wells Fargo and BlackRock earnings, Wednesday
• US CPI, Empire manufacturing, Wednesday
• Fed’s John Williams, Tom Barkin, Austan Goolsbee and Neel Kashkari speak, Wednesday
• TSMC earnings, Thursday
• ECB releases account of December policy meeting, Thursday
• Bank of America, Morgan Stanley earnings, Thursday
• US initial jobless claims, retail sales, import prices, Thursday
• China GDP, property prices, retail sales, industrial production, Friday
• Eurozone CPI, Friday
• US housing starts, industrial production, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were unchanged as of 1:17 p.m. Tokyo time
• Japan’s Topix rose 0.3%
• Australia’s S&P/ASX 200 fell 0.1%
• Hong Kong’s Hang Seng rose 0.2%
• The Shanghai Composite fell 0.2%
• Euro Stoxx 50 futures rose 0.2%
• Nasdaq 100 futures were little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0298
• The Japanese yen was little changed at 157.91 per dollar
• The offshore yuan was little changed at 7.3478 per dollar
• The Australian dollar was little changed at $0.6192

Cryptocurrencies

• Bitcoin rose 0.7% to $97,133.18
• Ether rose 0.2% to $3,222.49

Bonds

• The yield on 10-year Treasuries declined one basis point to 4.78%
• Australia’s 10-year yield advanced two basis points to 4.63%

Commodities

• West Texas Intermediate crude rose 0.2% to $77.64 a barrel
• Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Wenjin Lv.

©2025 Bloomberg L.P.