Asia shares mixed, dollar steady ahead of U.S. inflation

Hong Kong, Sept. 14 (BNA): Stock markets in Asia were mixed and the dollar was flat on Tuesday, as investors awaited US inflation data for more clues about when the Federal Reserve will cut gradual stimulus.

China’s continued tightening of grip on technology companies and a widening liquidity crunch for the country’s most indebted developer kept investors on edge in early trading, according to Reuters.

MSCI’s broadest index of Asia Pacific shares outside Japan rose 0.13%.

Australia’s S&P/ASX200 fell 0.31% to 7400.8, while Hong Kong’s Hang Seng fell into negative territory.

China’s blue-chip CSI300 Index is down 0.2% and the Nikkei in Tokyo is up 0.72%.

In Hong Kong, shares of property developer China Evergrande Group plummeted after it revealed it had hired financial advisors to examine its capital structure.

The company also said that sales will decline again in August due to concerns about its debt that will hurt liquidity and cash flow. Its shares are down 7%.

Chinese tech stocks are also being closely scrutinized after authorities asked the country’s tech giants to stop blocking each other’s links on their sites.

The guidance was the latest in a series of tight regulations that have sent the Hang Seng tech index down nearly 40% since its peak this year in February.

“We remain concerned about the regulations, what they mean and how they will be introduced, but with the correction going on, that means there is some value in certain parts of the Chinese stock market,” Luke Moore, chief financial services officer at Oreana, said.

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“We don’t see an end in sight to the changes yet, we believe the uncertainty will continue and everyone is looking for clarity on how far the regulations will go and what could be next.”

The Nasdaq Golden Dragon China Index, which tracks Chinese companies listed in the United States, fell 1.1% on Monday, bringing its decline over the past six months to 35.5%.

Meanwhile, markets are awaiting US inflation data on Tuesday, and core consumer prices are expected to rise 0.3% in August. Prices rose 0.3% in the previous month and 0.9% in June.

Economists expect annual inflation to ease slightly to 4.2% from 4.3% in July. The data comes ahead of the Federal Reserve’s main meeting on September 21-22.

“We estimate that the pace of price increases declined in August as the opening disputes slowly faded,” Joseph Caporso, head of international economics at the Commonwealth Bank, said in a note to clients.

“There will be a lot of analysis of individual price movements that reflect the reopening of the economy and supply bottlenecks.”

On Wall Street, the Dow Jones Industrial Average rose 261.91 points, or 0.76%, to 34869.63, the Standard & Poor’s increased 10.15 points, or 0.23%, to 4,468.73 points, and the Nasdaq Composite Index fell 9.91 points, or 0.07%, to 15105.58.

The prospect of a corporate tax increase in the US from 21% to 26.5% as part of the $3.5 trillion budget bill remains front and center for investors.

Goldman Sachs estimates that increasing the tax rate to 25% plus half of the proposed increase in foreign income tax rates could deduct 5% of S&P500 profits in 2022.

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The dollar index settled in Asian trading at 92.62, after retreating from a two-week high of 92.87 on Monday.

The yield on the benchmark 10-year Treasury bond rose to 1.3259% compared to its US close of 1.324% on Monday. The two-year yield, which rose as traders expected a hike in the Fed funds rate, was 0.2129% compared to the US close of 0.215%.

US crude rose 0.3% to $70.66 a barrel. Brent crude rose to $73.69 a barrel.

Gold was a little lower. Spot gold was trading at $1,790.31 an ounce.


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