Asian markets drop on rate worries ahead of inflation data. Asian equities fell Wednesday, tracking a drop on Wall Street ahead of a crucial US inflation report later in the day, which could have a huge bearing on the Federal Reserve\u2019s plans for raising interest rates.<\/p>\n
Investors are preparing for the consumer price figures with a sense of dread as analysts warn a forecast-beating reading would ramp up bets on another big Federal Reserve hike and reinforce recession expectations.<\/p>\n
The US central bank has said its decision on when and by how much to tighten monetary policy will be driven by data as it struggles to walk a fine line between bringing inflation down from four-decade highs and trying not to damage the economy.<\/p>\n
There had been hope that recent indicators showing activity slowing would give the Fed room to be less hawkish. But a bigger-than-predicted jump in jobs last month revived talk of a third straight three-quarter-point hike in September.<\/p>\n
“The (Fed policy board) will need to make sure inflation moves back towards target sustainably before contemplating pausing its tightening cycle,” Carol Kong, of Commonwealth Bank of Australia, said.<\/p>\n
“A strong inflation outcome today will likely reinforce the (board) is still some way away from that point yet, and see markets readjust higher their expectations for US interest rates.”<\/p>\n
Wednesday\u2019s figures come at a sensitive time for world markets, which have been buffeted by a range of other issues including the war in Ukraine, supply chain snarls and rising China-US tensions over Taiwan.<\/p>\n
While the latest earning season has been less painful than feared, there are increasing signs that the economic slowdown is beginning to impact companies, with some major firms — including Apple and Amazon — providing downbeat outlooks.<\/p>\n