The Japan Times - Most Asian markets rise on recovery hope as inflation data looms

Traders tracked a Wall Street advance as they brushed off fresh warnings that Federal Reserve rates would continue to rise and a World Bank decision to slash its global growth forecast.

After a stumble Tuesday, regional markets resumed the upward push that has characterised the start of the year thanks to China's emergence from nearly three years of zero-Covid isolation.

The reopening, easing of Beijing's tech crackdown and moves to help the property sector have raised hopes for the world's number-two economy, a crucial driver of world growth.

SPI Asset Management's Stephen Innes said: "Despite a solid start to the year, there should be a lot more upside to China's stocks, with earnings upgrades to drive further outperformance.

"Although we are not pitching a tent in that camp just yet, many investors are starting to believe China's reopening could be faster than expected on pent-up demand, a robust economic rebound and fewer supply constraints."

Hong Kong rose again, having already added about eight percent so far in 2023. Tokyo, Sydney, Seoul, Mumbai and Singapore were also in the ascendancy, though there were losses in Shanghai, Wellington, Taipei and Manila.

Focus this week is on Thursday's US consumer price index, which is expected to show that price gains eased further in December.

But while that could possibly allow the Federal Reserve to take a lighter approach to its monetary tightening campaign, policymakers continue to push back against any pivot away from rate hikes.

Markets were battered last year by fears that almost a year of hikes will tip the economy into recession.

Bank boss Jerome Powell said that "restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy".

Meanwhile, Fed governor Michelle Bowman said that while inflation was coming down, "we have a lot more work to do" and that once rates had peaked they would have to stay there for some time.

She added that "unemployment has remained low as we have tightened monetary policy and made progress in lowering inflation".

"I take this as a hopeful sign that we can succeed in lowering inflation without a significant economic downturn," she said.

And JP Morgan Chase CEO Jamie Dimon said borrowing costs could actually go higher than the five percent priced in by markets, suggesting they could hit six percent.

"This week's US CPI report is now the next focus for markets in the tug of war currently playing out between the market, which thinks the Fed will have to cut rates this year, and Fed officials who insist nothing even close to that will happen," said Michael Hewson at CMC Markets.

There was little reaction to the World Bank slashing its 2023 global growth forecast by about half and a warning that the economy was "perilously close" to recession owing to high inflation, rising interest rates and Russia's invasion of Ukraine.

Economists have warned of a slump in the world economy as countries battle soaring costs and central banks simultaneously hike interest rates to cool demand amid ongoing disruptions from the war in Ukraine.

The World Bank's latest forecast points to a "sharp, long-lasting slowdown", with growth pegged at 1.7 percent this year, roughly half the pace it predicted in June, according to its Global Economic Prospects report.

- Key figures around 0705 GMT -

Tokyo - Nikkei 225: UP 1.0 percent at 26,446.00 (close)

Hong Kong - Hang Seng Index: UP 0.7 percent at 21,477.26

Shanghai - Composite: DOWN 0.2 percent at 3,161.84 (close)

Dollar/yen: UP at 132.31 yen from 132.21 yen on Tuesday

Euro/dollar: UP at $1.0748 from $1.0739

Pound/dollar: UP at $1.2164 from $1.2153

Euro/pound: UP at 88.36 pence from 88.34 pence

West Texas Intermediate: DOWN 0.6 percent at $74.64 a barrel

Brent North Sea crude: DOWN 0.5 percent at $79.67 a barrel

New York - Dow: UP 0.6 percent at 33,704.10 (close)

London - FTSE 100: DOWN 0.4 percent at 7,694.49 (close)

K.Okada--JT