What you need to know today
On Tuesday, Hong Kong stocks spearheaded the rally in Asia, with the Hang Seng index continuing its upward trajectory, while mainland China’s CSI 300 index also posted gains. Conversely, Japan’s Nikkei 225 and the Topix index experienced declines following the release of higher-than-anticipated corporate inflation figures for January. In the United States, the previous day saw a mixed performance from stocks as investors awaited crucial inflation data to gauge the Federal Reserve’s stance on interest rate adjustments. The S&P 500 and Nasdaq closed down by 0.1% and 0.4%, respectively, while the Dow managed to eke out a modest 0.1% gain.
China’s valuations too low
Shaun Rein, the founder and managing director of the China Market Research Group, emphasized that the valuations of Chinese stocks are currently “way too low.” Despite China’s economic challenges affecting its stock markets, Rein suggested that investors should take a long-term view of China as an investment opportunity.
Steven Okun, the founder and CEO of APAC Advisors, highlighted that the process of decoupling between the United States and China is intensifying. He noted that U.S. restrictions on China are escalating, with decoupling becoming more pervasive. Okun suggested that the extent and breadth of this decoupling remain uncertain.
Tim Berners-Lee, the inventor of the World Wide Web, shared his top predictions for the future of the internet and its transformation through artificial intelligence (AI). As the web celebrates its 35th anniversary, Berners-Lee discussed how AI will shape its evolution, marking a significant milestone in technology’s advancement.
Barclays has identified three European stocks that it believes investors should consider buying in the upcoming quarter. The bank’s strategists expressed “high conviction” on these stocks, citing attractive risk-adjusted returns.
As Wall Street prepares for the release of a key inflation gauge, February’s consumer price index (CPI) report is anticipated to provide crucial insights into the Federal Reserve’s stance on rate cuts. Economists’ estimates project headline inflation to increase by 3.1% annually, with core inflation—excluding volatile food and energy prices—expected to rise by 3.7% year over year.
Investor concerns were heightened by January’s CPI report, which surpassed expectations. A similar surprise in February’s data could reignite fears of persistent inflation, potentially leading to Fed reluctance in reducing rates.
While February’s CPI report may show improvements compared to January’s, expectations for solid core numbers could still unsettle markets, particularly if the actual figures exceed forecasts. Fed Chair Jerome Powell has indicated a proximity to rate cuts but emphasized the importance of gaining confidence in inflation moderation, underscoring the challenge of managing inflationary pressures without stalling economic growth.