Asian markets slide ahead of US inflation update
BEIJING — Asian stock markets slid Monday ahead of a US inflation update that traders fear could lead to more rate hikes.
The Nikkei 225 NIK,
in Tokyo fell 1%, while the Shanghai Composite Index SHCOMP,
0.5% preferred. The Hang Seng HSI,
in Hong Kong lost 0.5%.
The Kospi 180721,
in Seoul fell 0.7% and Sydney’s S&P/ASX 200 XJO,
0.3% lost. Stocks in New Zealand NZ50GR,
Taiwan Y9999,
and Singapore STI,
withdrew while those in Jakarta JAKIDX,
won.
Traders are hoping Tuesday’s inflation data will show upward pressure on US prices easing, which could give some encouragement Federal Reserve wants to loosen up Efforts to cool down operations and hiring. They worry that a strong read after estimates of 2022 inflation were revised upwards last week would reinforce plans to keep interest rates high and potentially hike them.
A strong inflation number “can move like a wrecking ball through risky assets,” SPI Asset Management’s Stephen Innes said in a report.
On Friday, Wall Street’s S&P 500 benchmark index SPX
rose 0.2% to 4,090.46. The index ended the week down 1.1%, its biggest weekly decline since December.
The Dow Jones Industrial Average DJIA,
up 0.5% to 33,869.27. The Nasdaq COMP,
fell less than 0.1% to 11,718.12.
Stocks have been rallying since last month on hopes that the Fed could start cutting rates later this year. This is despite Chairman Jerome Powell’s warnings that interest rates will remain high for some time until inflationary pressures subside.
Other central banks in Europe and Asia have also hiked rates to cool inflation.
Wall Street raised its forecast of how much the Fed could raise interest rates after Powell said last week that there is “significant road ahead” to bring inflation down to its 2% target. He warned against expecting inflation to “pass quickly and painlessly.”
The US government revised Inflation in December at 0.1% MoM, vs earlier estimate of a 0.1% decline. The November reading was raised to 0.2% from 0.1% the previous month.
Traders are expecting Tuesday’s report to say consumer prices rose 0.5% mom in January.
The yield on the 10-year government bond, or the difference between the market price and the payout at maturity, rose to 3.73% from 3.66% on Friday.
The yield on the two-year government bond rose to 4.50% from 4.48%. It was up 4.08% just over a week ago and is near its highest level since November.
According to strategists at Credit Suisse, equity analysts cut earnings forecasts for companies in the S&P 500 by 4.5% in the first quarter due to the impact of inflation and slowing economic activity.
Oil prices then fell back after rising on Friday Russia said it would cut production next month by 500,000 barrels a day. Western countries have capped how much they will make customers pay for Russian crude in order to punish Moscow for its invasion of Ukraine.
On the energy markets benchmark US crude oil CLH23,
lost 75 cents to $78.97 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.66 to $79.72 on Friday. Brent Crude Oil BRNJ23,
the price basis for international oil trading, fell 71 cents to $85.68 a barrel in London. It rose $1.89 to $86.39 on Friday.
USDJPY dollar,
rose to 131.85 yen from 131.50 yen on Friday.
https://www.marketwatch.com/story/asian-markets-slide-ahead-of-u-s-inflation-update-1fdd3e91?siteid=yhoof2&yptr=yahoo Asian markets slide ahead of US inflation update
