(Bloomberg) — Asian stocks fell as better-than-expected U.S. inflation data reinforced expectations that the U.S. Federal Reserve may keep interest rates high for an extended period of time.
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Japanese and Australian stock benchmarks and Hong Kong stock futures all fell, reflecting Wednesday's sell-off on Wall Street. Index fills were modestly lower in Asian trade on Thursday, with the S&P 500 down 1% and the Nasdaq 100 down 0.9%.
After Wednesday's sharp selloff across the curve, U.S. Treasuries were firm and the dollar strength index was at its highest level this year. The yield on the policy-sensitive two-year note rose 23 basis points, while the 10-year note rose 18 basis points, topping 4.5% for the first time since November. Australian and New Zealand government bond yields rose on Thursday, while Japan's 10-year bond yield rose above 0.8%, its highest level since November.
The yen gradually appreciated against the dollar after falling to its lowest level since 1990. The currency weakness has sparked fresh speculation that Japanese authorities may intervene in the market to support the currency.
The move followed the US core consumer price index in March, which excludes food and energy costs. The index rose 0.4% from February, beating consensus estimates of 0.3% and beating expectations for the third consecutive month.
IG Australia market analyst Tony Sycamore said: “The fallout from higher-than-expected US inflation overnight will reverberate across regional equity markets today,'' including the US dollar. “Weakness in major Asian currencies will provide a cushion for the downside.” The yen and won will support exporters. ”
Investors now believe the Federal Reserve will cut interest rates only twice this year since September, fewer than the latest Fed dot plot that showed three cuts in 2024. Suggests. Market prices at the beginning of the year showed six cuts expected.
“Accommodative financial conditions continue to provide significant tailwinds for growth and inflation. As a result, the Fed is not done fighting inflation and interest rates will remain high for an extended period of time,” Apollo Global Management said. said Torsten Slok. “We stand by our view that the Fed will not cut rates in 2024,” he said.
Former Treasury Secretary Lawrence Summers went a step further, saying, “We need to take seriously the possibility that the next move in interest rates will be upward rather than downward.” Such a chance is in the 15% to 25% range, he told Bloomberg TV's Wall Street Week with David Westin.
Elsewhere in Asia, data will be released including inflation expectations from Australia, consumer and producer prices from China, and trade statistics from the Philippines. Markets are closed in Indonesia, Malaysia, India, Pakistan, Sri Lanka and Bangladesh.
Oil prices continued to rise on concerns about further conflict in the Middle East. US crude oil prices West Texas Intermediate on Wednesday said the US and its allies believe a major missile or drone attack by Iran or its proxies against military and government targets in Israel is imminent. After rising more than 1% on the news, the price gradually rose.
This week's main events:
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China PPI, CPI, Thursday
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Eurozone ECB interest rate decision Thursday
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U.S. new unemployment insurance claims, PPI, Thursday
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New York Fed President John Williams speaks Thursday
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Boston Fed President Susan Collins speaks Thursday
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china trade friday
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University of Michigan Consumer Sentiment, Friday
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Citigroup, JPMorgan and Wells Fargo are scheduled to report earnings on Friday.
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San Francisco Fed President Mary Daley speaks on Friday
The main movements in the market are:
stock
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As of 9:13 a.m. Tokyo time, S&P 500 futures were down 0.2%.
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Hang Seng futures fell 1.7%.
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Japan's TOPIX fell 0.7%
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Australia's S&P/ASX 200 falls 1.1%
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Euro Stoxx50 futures rose 0.2%
currency
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Bloomberg Dollar Spot Index little changed
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The euro was unchanged at $1.0743.
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The Japanese yen rose 0.2% to 152.85 yen to the dollar.
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The offshore yuan was almost unchanged at 7.2622 yuan to the dollar.
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The Australian dollar was almost unchanged at US$0.6507.
cryptocurrency
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Bitcoin rose 1% to $70,484.98
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Ether rose 0.6% to $3,534.28
bond
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The 10-year government bond yield was almost unchanged at 4.54%.
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Japan's 10-year bond yield rose 3.5 basis points to 0.830%.
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The Australian 10-year bond yield rose 11 basis points to 4.23%.
merchandise
This article was produced in partnership with Bloomberg Automation.
–With assistance from Winnie Hsu.
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