TOKYO (AP) — European benchmarks slipped and Asian shares mostly finished higher on Tuesday as investors awaited an update on U.S. consumer inflation that might help set the Federal Reserve’s policy on interest rates.
France’s CAC 40 slipped nearly 0.2% to 7,678.07. Germany’s DAX shed 0.3% to 16,982.64. Britain’s FTSE 100 fell 0.2% to 7,562.00. The future for the S&P 500 lost 0.3% while that for the Dow Jones Industrial Average was 0.2% lower.
In Asia, Japan’s benchmark Nikkei 225 added 2.9% to finish at 37,963.97, briefly topping 38,000 for the first time in 34 years. Australia’s S&P/ASX 200 lost earlier gains, edging 0.2% lower to 7,603.60. South Korea’s Kospi jumped 1.1% to 2,649.64.
Markets were closed in China, Hong Kong and Taiwan for the Lunar New Year holiday.
Japan’s producer price index data showed a 0.2% increase from a year ago, while remaining flat month-on-month. That may relieve pressure on the central bank to alter its longstanding ultra-lax monetary policy and raise its benchmark interest rate from minus 0.1%.
“The tame number may still suggest limited passthrough to consumer prices and may offer room for the Bank of Japan to keep to its wait-and-see for now,” Yeap Jun Rong, a market analyst at IG, said in a report.
The next big event for markets could be Tuesday’s update on inflation across the United States, which economists expect to show a drop back below the 3% level.
One worry for the market has been uncertainty about just how much danger lurks for the economy in the loans and other holdings banks have on their balance sheets that are tied to commercial real estate.
Inflation has been cooling enough that the Federal Reserve has hinted it may cut its main interest rate several times this year. Such cuts typically juice financial markets and the economy, and they would release pressure that’s built up since the Fed has taken its main interest rate to the highest level since 2001.
After earlier hoping cuts to rates could begin as soon as March, traders have since pushed their forecasts out to May or June. Reports showing the U.S. economy and job market remain remarkably solid, along with some comments from Fed officials, have been forcing the delays.
In energy trading, benchmark U.S. crude rose 27 cents to $77.19 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, rose 23 cents to $82.23 a barrel.
In currency trading, the U.S. dollar rose to 149.67 Japanese yen from 149.34 yen. The euro cost $1.0764, down from $1.0774.
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