Asia stocks erase gain on China; yen swings on BOJ: markets wrap

US share futures fell slightly after Wall Street benchmarks closed higher on Thursday in a volatile session as investors await inflation data for clues on the Federal Reserve’s rate-hike campaign.

Hong Kong’s Hang Seng Index slid as much as 1.3% while the market’s tech gauge fell slightly more. The Hang Seng dropped on Thursday into a 10% correction from a peak in January. 

Japanese markets are under the spotlight, with data on Friday showing accelerating inflation as the government’s nominee to be the next central bank governor faced his first grilling in parliament. 

The yen pared gains and swung to a small loss against the greenback as Kazuo Ueda told lawmakers he saw inflation peaking. He said the current policy easing was appropriate but added that the central bank could move toward normalisation if stable 2% inflation comes into sight. 

The dollar was little changed against most major currencies and Treasuries looked set to continue their advance into a third day.

A key US economic data awaits investors later on Friday in the form of personal consumption expenditures – the Fed’s preferred price gauge. It’s expected to show acceleration, adding to a string of unfavourable figures that bolster the case for the central bank to hold rates at 5.25% for some time, according to Bloomberg Economics’ Anna Wong. The current benchmark sits in a range between 4.5% and 4.75%.

“Whatever happens, the dollar is very much in focus today – it’s likely to remain bid should PCE and inflation expectations move higher,” according to Matthew Simpson, an analyst at City Index.

Investors are caught between welcoming the evidence that the US economy remains on a stable footing and fearing that this resilience will provoke a stern reaction from policymakers, according to Michael Shaoul at Marketfield Asset Management,

Billionaire quant investor Cliff Asness warned that US stocks are vulnerable to a macro shock if inflation doesn’t stage a spirited decline as the market expects. JPMorgan Chase & Co’s chief Jamie Dimon told CNBC there’s still a chance for a soft landing for the US economy, though “out in front of us there’s some scary stuff”.

Oil extended on Thursday’s advance, when it snapped its longest losing streak since December amid strength in commodity currencies and signs of appetite for risk taking.

Elsewhere, Bitcoin was on pace for its second monthly advance, breaking with stocks and other riskier assets that have slid amid renewed concern about rising interest rates. The crypto market’s rally recovers only a sliver of the ground lost last year, when prices tumbled and the collapse of the FTX exchange caused a pullback by investors. BM/DM