China's inflation and US Fed's 'patience' tests Asian markets' confidence

Asian markets are treading with caution amidst a series of conflicting cues. Key indices declined in trade after data showed that the inflation in China was less than expected, reflecting that the economy was slower than estimated.

On the other hand, minutes of the last Fed meeting showed that the American central bank was a divided house and that the policy stance hereon was uncertain.

Fed officials acknowledged that the policy path ahead is "less clear" after approving an interest rate hike at their recent meeting.

The minutes showed the rate hike came with reluctance from a few members who thought the lack of inflationary pressures argued against another increase.

The minutes came after Fed chair Jerome Powell hinted at slower monetary tightening.

He said Fed officials were keeping a close eye on the voices of financial market, and that Fed policy was flexible and clung to real-time economic developments.

He added that the central bank would not hesitate to adjust its balance sheet reduction plan if it causes problems in the markets.

All three major US indexes surged more than 3 per cent on Friday on Powell's comments and posted 4-day winning streak on Wednesday at close.

The improvement in global market sentiment indicates signs of progress in the trade negotiations between the world's top two economies.

Also lifting the market sentiment was the news that the latest trade negotiations between the world's top two economies showed signs of progress.

(With inputs from IANS)
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