US inflation fails to ease trade worries

US Inflation Data Provides Little Relief to Global Markets as Trade War Concerns Linger

[HONG KONG] Asian investors struggled on Thursday to build on much-needed gains on Wall Street as a below-forecast read on US inflation was offset by ongoing concerns about President Donald Trump’s trade war.

US Inflation Data Provides Relief, But Trade War Concerns Persist

While attention has been mostly on the trade saga in recent weeks, Wednesday’s data showed US consumer inflation slowed slightly more than expected in February – the first full month of Trump’s second term. The report also revealed core inflation, which excludes volatile food and energy prices, had come in below consensus. The figures helped temper some worries about a recent uptick in prices.

Uncertainty Surrounds Trade War

However, National Australia Bank’s Tapas Strickand said it was "worth noting the data was for February and thus largely pre-dates any potential tariff impacts." Stephen Innes at SPI Asset Management warned that while markets reacted positively to the consumer price readings, there was still a lot of uncertainty in markets.

Markets Respond to Data, But Trade War Remains a Concern

In early Asian trade, markets moved in a tight range. Hong Kong, Sydney, Singapore, Wellington, and Jakarta fell, while Tokyo, Shanghai, Seoul, Taipei, and Manila rose. Mark Hackett at Nationwide said "for the last three weeks, traders have felt like buying this market is like trying to catch a falling knife."

Ukraine Crisis Developments Add to Uncertainty

Focus is also turning to developments in the Ukraine crisis after Kyiv endorsed a US proposal for a 30-day ceasefire, with Washington saying it wants Russia to agree to an unconditional halt to hostilities. The Kremlin said it was awaiting details of the US proposal and gave no indication of its readiness to stop fighting, but Trump warned "devastating" sanctions were possible if Russian President Vladimir Putin refused an agreement.

Conclusion

The uncertainty surrounding the trade war and potential tariffs continues to weigh on markets, despite the positive inflation data. As the situation remains fluid, investors are advised to remain cautious and closely monitor developments.

FAQs

Q: What was the outcome of the latest US inflation data?
A: The data showed consumer inflation slowed slightly more than expected in February, with core inflation coming in below consensus.

Q: What are the concerns surrounding the trade war?
A: Ongoing concerns about President Donald Trump’s trade policies, including tariffs and potential further measures, are causing uncertainty in markets.

Q: How did the markets respond to the data?
A: Markets moved in a tight range, with some indices rising and others falling, as investors weighed the impact of the trade war against the positive inflation data.

Q: What is the current situation in the Ukraine crisis?
A: The crisis remains ongoing, with the US proposing a 30-day ceasefire and Russia refusing to agree to an unconditional halt to hostilities.