Japan's inflation hits 16-month low

Asian markets' tech turbulence

Shares in Asia relinquished early gains, led by a significant selloff in technology stocks in Hong Kong, as China imposed new restrictions on its colossal mobile games market. The regional equity gauge is poised for its steepest weekly loss in over a month, following a more than 4% plunge in the Hang Seng technology index. Major tech firms Tencent Holdings Ltd. and NetEase Inc. experienced sharp declines of nearly 16% and a record 28%, respectively.

Japan inflation rate falls to 16-month low

Globally, inflation is showing signs of easing, influencing monetary policy expectations. In Japan, the annual inflation rate fell to 2.8% in November from 3.3% in October, marking the lowest rate since July 2022, driven by a slowdown in food and transport prices. Meanwhile, the US core PCE deflator likely slowed to 3.3% year-on-year in November, reinforcing predictions of Federal Reserve interest rate cuts in 2024.

US economic data and Fed rate speculation

In the US, GDP growth for the third quarter was revised down to 4.9%, falling short of forecasts. Personal consumption data also came in weaker than expected. This has led swaps traders to price in approximately 150 basis points of Fed rate cuts next year, double what the central bank has indicated.

UK retail sales and Oil market dynamics

UK retail sales appear to have rebounded slightly in November, following a decline in October. In the oil sector, prices are on track for a second consecutive weekly gain, influenced by shipping disruptions in the Red Sea and Angola’s departure from OPEC. However, crude is heading towards its first annual decline since 2020.