Stocks fall in Asia ahead of key US inflation data: markets wrap
Stocks dipped in Asia on Wednesday following a Wall Street retreat and caution ahead of US inflation data that will shape investor expectations for further Federal Reserve interest-rate hikes.
An Asia equity gauge dropped, dragged lower by declines in technology stocks. Chinese shares wavered as traders evaluated slower-than-anticipated consumer and factory inflation in the world’s second-largest economy.
US contracts fluctuated following a drop in the S&P 500 for a fourth session. Micron Technology became the latest chipmaker to warn about slowing demand, fanning economic concerns and spurring a slide in the technology-heavy Nasdaq 100.
Treasury yields and a dollar gauge were steady, crude oil hovered above $90 a barrel, and both gold and Bitcoin were on the back foot.
The two-year Treasury rate exceeds the 10-year by nearly 50 basis points. The inversion, around deepest since 2000, is viewed as a sign of a looming recession under the Fed’s monetary-tightening campaign to curb inflation.
A report on Wednesday is expected to show headline US consumer-price inflation cooled but stayed elevated in July, while the core reading may have quickened on an annual basis. How the figures affect views on Fed tightening will be key for risk sentiment.
“The FOMC will need to make sure inflation moves back towards target sustainably before contemplating pausing its tightening cycle,” Carol Kong, a strategist at Commonwealth Bank of Australia, wrote in a note. “A strong inflation outcome today will likely reinforce the fact that the FOMC is still some way away from that point yet, and see markets readjust higher their expectations for US interest rates.”
Federal Reserve Bank of St Louis president James Bullard said the Fed will be prepared to hold interest rates “higher for longer” should inflation continue to surprise to the upside.
The Fed “will be driving those short rates higher,” said Gary Schlossberg, a global strategist for Wells Fargo Investment Institute, on Bloomberg Television. “We will be seeing a deepening inversion and a full inversion of the Treasury yield curve.”
In China, consumer price inflation accelerated in July to 2.7%, the highest level in two years, but missed economists’ expectations. The producer price index climbed 4.2%, below the median forecast and down from June.
Some of the main moves in markets:
- S&P 500 futures were up 0.1% as of 10:36 a.m. in Tokyo. The S&P 500 fell 0.4%
- Nasdaq 100 futures added 0.1%. The Nasdaq 100 fell 1.2%
- Japan’s Topix index lost 0.2%
- South Korea’s Kospi index declined 0.7%
- Hong Kong’s Hang Seng Index slid 0.8%
- China’s Shanghai Composite Index was little changed
- Australia’s S&P/ASX 200 index fell 0.1%
- Euro Stoxx 50 futures were down 0.2%
- The Bloomberg Dollar Spot Index was steady
- The euro was at $1.0211
- The Japanese yen was at 135.17 per dollar, down 0.1%
- The offshore yuan was at 6.7590 per dollar, down 0.1%
- The yield on 10-year Treasuries advanced one basis point to 2.78%
- Australia’s 10-year yield climbed about one basis point to 3.20%
- West Texas Intermediate crude was at $90.51 a barrel
- Gold was at $1,792.40 an ounce, down 0.1%. BM