Chinese Consumer Price Index Surged to Four-Month High, Global Markets Gained Momentum

Chinese consumer price index surged to a four-month high in the month of September, while producers inflation also increased for the first time in last four years, showing signs of relief for the globes second largest economy. In addition, CPI numbers also showed that the extra limit in the economy was starting to ease.

Asian stocks surged strongly following CPI report, while the dollar exchange rate also increased, helped in erasing losses in the latest session, as higher-than-anticipated Chinese inflation numbers eased traders concerns about the overall health of the world’s second-biggest economy.

The dollar index surged nearly 0.3% to 97.774 in early Asian trade. It had surged to a seven-week high versus the basket of other major currencies on Wednesday following growing expectations that the Fed is likely to increase interest rate by the end of this year.

MSCI’s broadest index of Asia-Pacific shares increased 0.4% in early Asian trade on Friday following a drop of 1.1% on Thursday due to weak Chinese export numbers, which strongly impacted global markets and declined the USD exchange rate.

Chinese consumer price index (CPI) increased 1.9% over the same period of last year after the decline of 1.3% in the recent months based on the National Bureau of Statistics report. Whereas, analysts had expected Chinese CPI in the range of 1.6% in the month of September.

Chinese producers prices were constantly declining over the last four years, but the decline eased in recent months amid Government easing programs. Analysts say that the price improvement depends mainly on the condition of the domestic manufacturing sector.

China is a very key market for several industries and the decline in Chinese economy have a vast impact on global equities and markets. Therefore, positive CPI data could help in restoring trader’s confidence on the global markets.