Asia stocks, US futures fall after hot CPI print: markets wrap

Equity benchmarks in Australia, South Korea, Japan and China fell. The drop for Hong Kong’s Hang Seng Index pushed it more than 10% below its January peak.

Contracts for the S&P 500 declined after the index ended Tuesday little changed. Nasdaq 100 futures also slid after the gauge, which is more sensitive to higher interest rates, rose 0.7% on Tuesday.

Australian and New Zealand bond yields climbed. The two-year Treasury yield held its gains after adding 10 basis points on Tuesday to touch the highest level since November. The 10-year Treasury benchmark was largely unchanged after falling four basis points in the prior session. 

The moves were driven by US CPI data that showed prices rose more than forecast, and subsequent comments from policy makers.

Federal Reserve Bank of Philadelphia president Patrick Harker said the Fed was nearing the point where rates were restrictive enough. “In my view, we are not done yet,” he said. “But we are likely close.”

Harker’s Richmond Fed counterpart Thomas Barkin told Bloomberg TV that the central bank might “have to do more”to fight inflation and Dallas Fed president Lorie Logan said rate increases could last “for a longer period than previously anticipated”. 

“Inflation is still falling, but it’s not falling as quickly as we hoped,” Benjamin Kirby, co-head of investments for Thornburg Investment Management said in an interview with Bloomberg Television. “The overall narrative is pretty much intact,” he added. “The Fed is nearing its terminal rate.”

The dollar edged higher and the yen strengthened after weakening over the prior two days. Oil fell for a second day after the announcement that the US was selling more crude from its strategic reserves.

Elsewhere, the People’s Bank of China added more cash into the financial system to meet a rebound in loan demand after the nation eased Covid restrictions. BM/DM