U.S. Inflation Surges, European Central Bank Decision Awaited, and Arm's Debut on Wall Street.


zForex.com Representative
Despite August's US inflation being higher than expected at 3.7% (compared to the anticipated 3.6%), most Asia-Pacific markets experienced gains. Meanwhile, European markets opened with a mixed outlook, with investors eagerly anticipating the European Central Bank's upcoming rate decision.
Shares of Arm, the British chip design company founded in 1990, will begin trading in New York on Thursday for the first time after being taken private by SoftBank in 2016. Shares of Japanese investment holding company Softbank slipped slightly on Thursday after subsidiary Arm priced its initial public offering at $51 per share.
In Australia, the unemployment rate remained stable at 3.7% in August, aligning with economist predictions. However, there is uncertainty surrounding the European Central Bank's decision, with economists split on whether it will maintain rates or opt for a 10th consecutive hike, potentially reaching 4%. Market expectations lean towards the latter, although concerns about the economic decline in the Eurozone could sway more dovish ECB members.
Demand for Japanese 20-year bonds at auction was the strongest since May 2020, soothing concerns about a potential normalizing of monetary policy by the Bank of Japan.
The U.S. August inflation data surpassed expectations, largely due to surging oil prices, with the gasoline index being the primary contributor to the monthly rise in the consumer price index (CPI).
The Federal Reserve is unlikely to adjust interest rates at its upcoming meeting on September 20, as markets have already priced in a more than 95% probability of no change. However, the November meeting, being the year's final one, might witness a rate increase if inflation remains elevated. Presently, the market anticipates a cautious stance from the Fed as it monitors inflation.