Hong Kong, Feb. 15 (BNA): Asian stocks fell while the US dollar held steady on Wednesday after US inflation data and comments from central bank officials made investors wary of higher interest rates for a longer period.
European stock markets seemed about to follow Asia’s lead. Across the region Euro Stoxx 50 futures were down 0.21%, German DAX futures were down 0.23%, and FTSE futures were down 0.11%.
US headline consumer inflation came in at 6.4% year-on-year for January, slightly above economists’ expectations of 6.2%, which led to a sell-off in the bond and Fed funds futures market as hopes grow that interest rates could be cut later. from this year. dull.
Fed funds futures now point to peaks above 5.2% by the middle of the year and rates above 5% at the end of the year.
Two-year Treasury yields, which rise when prices fall, rose about nine basis points in New York trade to 4.611%, widening their premiums over 10 years – an unusual phenomenon that reliably points to a recession.
In the early afternoon, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.4%, led by declines of more than 1% in Australia and Hong Kong. Japan’s Nikkei average fell, reversing a small early gain.
S&P 500 futures fell 0.4% in Asia. Wall Street closed mixed on Tuesday after the inflation reading.
Analysts were bracing for further declines.
“If you combine this previous rhetoric of the (US) Federal Reserve trying to keep prices higher for a longer period and the recent CPI number … it is likely that there has to be a degree of moderation in equity markets, both in developed markets and in Asian markets,” he said. Manishi Raychaudhary, Head of Asia Pacific Equity Research at BNP Paribas.
He said the dollar may also regain some strength against emerging market currencies, bolstered by the prospect that US interest rates will remain high.
The dollar touched a six-week high of 133.30 yen overnight and hovered around 133.05 yen on Wednesday. It has been tougher against other currencies in the wake of the CPI data, but appears to be pausing after slipping in January.
The dollar index settled against the other major currencies at 103.4.
The Australian dollar fell slightly to $0.6938, although central bank governor Philip Lowe said interest rates need to rise further to contain inflation in remarks to a parliamentary committee.
China’s central bank ramped up its medium-term liquidity injections as it rolled back policy loans due on Wednesday, while keeping the interest rate unchanged, in line with market expectations. But mainland stock markets fell broadly in the early afternoon as investors waited for more signs on whether an expected economic recovery is gaining momentum.
Oil prices fell as traders worried about oversupply and weak demand. US crude fell 0.86% to $78.38 a barrel. Brent crude fell to $84.87.
Gold gave up some early gains this afternoon. Spot gold was trading at $1,847.5085 an ounce. Bitcoin clung to the overnight rebound at $22,114.
MI