As the world's best investment manager and financial market journalist, I am here to break down the latest developments in the market for you. The slide in oil and commodity prices is causing a stir among investors, especially with Wednesday's U.S. consumer price inflation figures on the horizon.
But the big question is, should investors see this as a positive 'risk on' signal or not? The answer lies in how these price changes reflect on U.S. inflation and the potential impact on the Federal Reserve's interest rate decision next week.
If disinflationary dynamics push U.S. inflation lower, the Fed may cut interest rates more than expected, which could benefit Asian and emerging market assets. However, if these price changes indicate weakening global demand and economic activity, investors may shy away from riskier markets.
Recent data from China has added to the uncertainty, with import growth collapsing to just 0.5% in August. This has raised concerns about the future of inflation and economic growth in the region.
With oil prices sinking and U.S. futures taking a hit, it's clear that disinflationary pressures are mounting. This could lead to a further drop in inflation readings next year, potentially forcing the Fed to revise its projections down.
Asian markets will have a chance to react to the U.S. inflation data on Thursday, following a relatively calm trading day on Wednesday. The Reserve Bank of Australia's upcoming policy meeting is also in focus, with expectations for a cautious approach to rate cuts.
Key developments to watch out for on Wednesday include a speech by RBA assistant governor Sarah Hunter and the release of South Korea's unemployment data for August. Additionally, the U.S. Presidential debate on Tuesday could also influence market sentiment.
Stay tuned for more updates on how these events could impact Asian markets and your investments. As always, it's important to stay informed and be prepared for any potential changes in the market.