Asia shares track Wall Street rally with inflation data, Fed in focus

Asian shares edged up in early trade on Tuesday, following an upbeat session on Wall Street while investors turned their attention to key U.S. inflation data and the Federal Reserve’s interest rate decision this week.

Investors will be closely monitoring U.S. Consumer Price Index (CPI) data, due to be released on Tuesday, and Producer Price Index (PPI) data, due out Wednesday, for a reading of how well the Fed’s tightening cycle has managed to curb inflation.

The equity index’s gains partly reflected expectations for a Fed tightening pause for the first time since January 2022 and for CPI and PPI to come in lower than the prior month, investors and strategists said.

“Overall equity markets reacted positively to expectations the monetary policy cycle may be nearing its peak,” ANZ analysts said in a note. “U.S. markets are now pricing a 72% probability that the Federal Reserve Monetary Policy Committee (FOMC) will hold rates at this week’s meeting.”

In China, to prop up the economy, the central bank cut its seven-day reverse repo rate by 10 basis points to 1.90% from 2.00% on Tuesday, when it injected 2 billion yuan ($279.97 million) through the short-term bond instrument.

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