By Ankur Banerjee
Asian stocks wobbled on Wednesday as investors brace for U.S. inflation data and an eagerly awaited U.S. presidential debate. Oil prices remained near three-year lows amid concerns over weak demand outlook.
Democratic Vice President Kamala Harris and Republican presidential candidate Donald Trump are set to face off in their first debate, which could be a crucial moment in their race for the White House.
The debate, scheduled to start at 0100 GMT, may not have an immediate impact on monetary policy, but investors are keen to hear about fiscal policies and economic plans from the candidates.
Investors in Asia are on edge, with MSCI's broadest index of Asia-Pacific shares outside Japan down 0.08%. Oil prices fell 1% in early trading.
Elias Haddad, senior markets strategist at Brown Brothers Harriman, commented, "The path to 270 electoral college votes is shaping up to be a nail-biter." Haddad mentioned that a clear winner in the debate could lead to a stronger USD and higher Treasury yields.
Investors will also be watching the U.S. Labor Department's consumer price index report for policy clues, as the Federal Reserve has emphasized the importance of employment over inflation.
While the Fed is expected to cut interest rates next week, the size of the rate cut is still uncertain. Markets are currently pricing in a 66% chance of a 25 basis points cut and a 34% chance of a 50 bps cut.
In commodities, oil prices stabilized slightly after OPEC+ revised down its demand forecast. Brent crude was 0.5% higher at $69.54 a barrel, while WTI crude rose 0.6% to $66.16 a barrel.
Analysis:
The upcoming U.S. inflation data and presidential debate are key events that could impact the financial markets. Investors are closely monitoring the candidates' fiscal policies and economic plans for clues on future market trends.
The uncertainty surrounding the size of the expected Fed rate cut next week is adding to market volatility. A clear winner in the debate could lead to a stronger USD and higher Treasury yields, while a mixed labor report has left room for speculation.
Overall, investors should stay informed and cautious during these uncertain times, as market reactions to political events and economic data could have significant implications for their portfolios and financial well-being.