Asian stocks fall as US inflation rekindles typing nerves

  • MSCI Asia ex Japan -0.24%, Nikkei -0.38%
  • European equities open lower
  • Markets await Powell’s testimony after US inflation surges
  • RBNZ stimulus cut surprise pushes Kiwi dollar higher

SHANGHAI, July 14 (Reuters) – Asian stocks fell on Wednesday after data showing the biggest rise in US inflation in 13 years fueled investor expectations that the Federal Reserve could exit the measures earlier than expected revival of the pandemic era.

The US consumer price index jumped 0.9% in June, the Labor Department said on Tuesday. It was above market expectations and the biggest gain since June 2008. read more

Global stocks have rallied in recent weeks, sending MSCI’s largest global equity gauge (.MIWD00000PUS) to an all-time high on Tuesday, as investors bet on a global economic recovery just weak enough to allow central banks to maintain an accommodating policy.

Shaking a complacent market, the Reserve Bank of New Zealand (RBNZ) unexpectedly announced on Wednesday that it would end its bond-buying program starting next week, pushing the Kiwi dollar sharply up as a result. that the markets are betting that a rate hike is now imminent. Read more

Shares in Europe were pegged at a lower open on Wednesday as investors reassessed the policy outlook.

Pan-regional Euro Stoxx 50 futures fell 0.26% for the last time, while German DAX futures fell 0.34% and French CAC 40 futures slipped 0, 33%.

Futures contracts on FTSE fell 0.27%.

“Against the backdrop of higher and longer US inflation, an earlier decline appears to be the likely direction of travel in terms of policy,” said Rob Carnell, ING Asia-Pacific research manager.

The largest MSCI Asia-Pacific stock index outside of Japan (.MIAPJ0000PUS) plunged 0.24%, as Chinese blue chips (.CSI300) fell 1.08%, the Hang Seng of Hong Kong (.HSI) slipped 0.7% and Seoul’s Kospi (.KS11) lost 0.21%.

The Japanese Nikkei (.N225) lost 0.38%.

Investors are watching closely the semi-annual testimony of Fed Chairman Jerome Powell to Congress on Wednesday and Thursday as to whether the Fed will take more aggressive action to stop rising inflation. Powell’s testimony comes as the Biden administration continues to push for fiscal stimulus to stimulate the U.S. economy.

Democrats on the U.S. Senate Budget Committee reached agreement on Tuesday night on a $ 3.5 trillion infrastructure investment plan they aim to include in a budget resolution to be debated later this summer. Read more

Meanwhile, in Asia, China is due to release second-quarter economic growth data on Thursday, the same day a reduction in bank reserve requirements is expected to take effect, releasing 1 trillion yuan ($ 154.47 billion ) to help support an unbalanced economic recovery.

Economists in a Reuters poll expected China’s economic growth to slow in the second quarter as rising raw material costs hurt factories and new COVID-19 outbreaks weighed on spending of consumption. Read more

The Chinese premier said on Tuesday that the country would take “comprehensive measures” to moderate rising commodity prices.

On Wall Street overnight, stocks first took the CPI data in stride, pushing up tech stocks which typically thrive with low interest rates, but major indexes eventually closed lower. .

The Dow Jones Industrial Average (.DJI) fell 0.31% to 34,888.79, the S&P 500 (.SPX) lost 0.35% to 4,369.21, and the Nasdaq Composite (.IXIC) fell from 0.38% to 14,677.65.

A $ 24 billion 30-year Treasury bond auction reflected investor nervousness when they were sold for a 2.00% yield, more than two basis points above where the debt was exchanged before the auction.

Bond yields fell on Wednesday after crossing the curve a day earlier on inflation data.

The 30-year yield edged down to 2.0234% after a close of 2.037%, while the benchmark 10-year yield slipped to 1.3963% after a close of 1.415% on Tuesday.

The policy-sensitive two-year yield was 0.253% against a close of 0.255%.

In the currency market, the safe haven yen strengthened, with the dollar losing 0.14% against the Japanese unit at 110.45. The euro rose 0.14% to $ 1.1791 after the greenback hit a three-month high against the single currency.

The dollar index, which tracks the greenback against a basket of currencies from other major trading partners, fell 0.15% to 92.660 after hitting 92.832 previously, just below the 92.844 level reached on the week last for the first time since April 5.

The New Zealand dollar jumped 1.14% after the RBNZ announced it was ending asset purchases.

Oil prices stabilized after data showed China’s first-half crude imports fell 3% from January to June from a year earlier. They had jumped more than 2% on Tuesday after the International Energy Agency said the market should expect supply to tighten amid disagreements among major producers. Read more

US crude fell 0.25% to $ 75.06 per barrel and global benchmark Brent crude fell 0.16% to $ 76.37 per barrel.

Spot gold rose 0.37% to $ 1,814.04 an ounce as the dollar and US yields fell.

($ 1 = 6.4739 Chinese yuan)

Reporting by Andrew Galbraith; Editing by Ana Nicolaci da Costa

Our Standards: The Thomson Reuters Trust Principles.

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