Hang Seng Index, ASX200, Nikkei 225: Fed Fear Weighs on Sentiment

Market Snapshot

The Hang Seng Index, ASX 200, and Nikkei 225 all saw a gloomy morning session.

This morning, there were no economic indications to take into account for investors. Investors have to think about central bank monetary policy aims in the absence of statistics.

The US and sub-component data for Michigan Consumer Sentiment indicated a more hawkish Fed policy stance. According to preliminary data, the Michigan Consumer Sentiment Index increased in February from 64.9 to 66.4. Interest was also generated by the sub-components, with the Michigan Inflation Expectations Index rising from 3.9% to 4.2%.

The markets received a warning from Friday's Inflation Expectations Index as investors anticipated the US CPI Report on Tuesday. The Fed's rate-hawks would have the power to raise interest rates over 5% in the event of an unanticipated increase in the US annual inflation rate.

China's annual inflation rate increased last week from 1.8% to 2.1% in January, while the inflation rate in the Euro area decreased from 9.2% to 8.5%. According to the Fed's preferred Core PCE Price Index figures, inflation has moderated but is still much higher than pre-pandemic levels, offering the Fed aggressive justification to raise interest rates over 5%.

The Dow and the S&P 500 had increases of 0.50% and 0.22%, respectively, while the NASDAQ Composite Index dropped by 0.61% on Friday.