Asian Stocks Cautiously Higher Amid US Inflation Data Anticipation

Asian stocks edged higher on Wednesday, mirroring Wall Street's overnight gains, but investor caution ahead of U.S. inflation data kept advances muted. Market participants closely monitor the Consumer Price Index (CPI) for clues on the Federal Reserve's monetary policy in 2025. The Fed signaled fewer rate cuts in December, citing persistent inflation.

Japan's Nikkei 225 rose 0.3%, while the TOPIX gained 0.6%. Australia's S&P/ASX 200 was flat as investors awaited Thursday's employment data. China's Shanghai Shenzhen CSI 300 dipped 0.2%, and the Shanghai Composite was unchanged. Hong Kong's Hang Seng inched up 0.1%. Economic focus remains on China, with GDP, industrial production, and retail sales data due Friday, offering insights into the country’s 2024 performance.

In Southeast Asia, Thailand’s SET Index dropped over 1%, Singapore's Straits Times fell 0.3%, and Malaysia's KLCI slid 0.7%. India’s Nifty 50 Futures were slightly lower. South Korea's KOSPI rose 0.3%, buoyed by expectations of a 25-basis-point rate cut by the Bank of Korea on Thursday, a move aimed at supporting the slowing economy amid political uncertainty.

Markets remain under pressure following a sharp shift in Fed rate expectations. Forecasts now indicate only one rate cut in 2025, down from four projected earlier, as reported by Fedwatch.

Political developments also drew attention, with South Korea’s impeached President Yoon Suk Yeol arrested on Wednesday for attempting to enforce martial law in late 2024.

Investors are bracing for pivotal economic data globally, with U.S. inflation figures and China's economic indicators likely to shape market sentiment in the coming days.