THE latest US monthly inflation figures have scuppered hopes for a June interest rate cut, sending Asian markets yesterday into a spin.

An ING analysis stated that the US inflation quashed the chances of a June Fed rate cut.

“US inflation came in at 0.4% month-on-month for the third consecutive month, more than double the rate we need to consistently hit to bring inflation down to 2% year-on-year. 

“Expectations for a June Federal Reserve interest rate cut have collapsed with the higher for longer narrative on rates firmly in place. September is going to be the earliest opportunity for any policy easing,” it added.

The disappointing inflation data sent all three main indexes on Wall Street deep into the red on Wednesday.

Asia followed suit yesterday morning but some markets bounced into positive territory as the day wore on while others pared many of their losses.

Hong Kong, Tokyo, Sydney, Singapore, Wellington, Taipei, Bangkok and Manila slipped, while Shanghai and Seoul edged up.

London was flat in the morning, Paris dipped and Frankfurt rose.

“The fallout from the hotter-than-expected US inflation read… will reverberate across regional equity markets,” Tony Sycamore, of IG Australia, was quoted as saying in an AFP report.

Observers warned the pick-up might not be a blip but could point to a worrying trend, added the AFP report.

All eyes are now on Bursa Malaysia when it opens for trading this morning after being closed for two days for Hari Raya.

At the close of trading on Tuesday, Bursa Malaysia closed marginally lower, attributed to profit-taking activities ahead of the Hari Raya Aidilfitri holidays.

At 5pm, the FTSE Bursa Malaysia KLCI declined 6.47 points, or 0.42%, to 1,553.51 from Monday’s close of 1,559.98.

On Tuesday, Rakuten Trade equity research vice-president Thong Pak Leng told Bernama that “the gains (on Tuesday) were limited due to the anticipation of key inflation data and further signals regarding the US interest rates.”

“Investor focus is primarily on the US Consumer Price Index data for further insights into interest rates, particularly after a strong nonfarm payrolls report led traders to adjust expectations for a rate cut in June,” he said.

Following the new US inflation figures, it is likely Bursa Malaysia will also suffer a slump when it opens today – April 12, 2024.