Asian shares edgy amid inflation fears, dollar at one-year high

Hong Kong, Oct 13 (BUS): Asian stocks were on the alert Wednesday as concerns about rising energy prices fueling inflation weighed on sentiment and led expectations that the United States would scale back its emergency bond purchase program, keeping the dollar in place for one year. high.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1% in early trade, stable after dropping more than 1% the previous day, in its worst daily performance in three weeks.

Movements were muted in most markets. Chinese blue chip stocks stabilized, Australia pulled out with a 0.06% gain, while Japan’s Nikkei slid 0.2%, Reuters reported.

The stock market in Hong Kong was closed in the morning due to the typhoon.

Also contributing to the turbulent mood, investors await a batch of data due to be published on Wednesday, including Chinese trade numbers, US consumer price inflation data, and the minutes of the US Federal Reserve’s September meeting.

The imminent start of corporate earnings season has also deterred some investors from placing big bets.

“This week, inflation has largely outpaced everything else, because that somehow pushes the Fed’s expectations and that is very dominant,” said Stefan Hofer, LGT’s chief investment analyst in the Asia Pacific region.

He added, “This earnings season is also important because in the previous season, earnings especially in the US were very strong, in part due to the base effect. The third quarter may be a little more record-breaking.”

The US Federal Reserve is close to starting to scale back its massive bond-buying program for pandemic relief, a decision complicated by growing concerns around the world that rising energy costs will stoke inflation while also limiting an economic recovery.

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Oil prices are currently near multi-year highs, but were firmer in Asian morning trade.

Brent crude fell 0.29% to $83.18 a barrel, away from Monday’s three-year high of $84.6, while US crude fell 0.2% to $80.48 from Monday’s seven-year high of $82.18.

Despite rising inflation concerns, there is growing optimism about the state of the economic recovery. Three policymakers at the US Federal Reserve said on Tuesday that the US economy has recovered enough for the central bank to begin withdrawing its support in a crisis period.

As a result, stocks fell on Wall Street overnight. The Dow Jones Industrial Average fell 0.34%, the S&P 500 lost 0.24%, and the Nasdaq Composite fell 0.14%.

The decrease in probability also means that the dollar was strong, remaining just below the one-year high against the other major currencies hit the previous day.

The dollar index was at its latest at 94.413, far from Tuesday’s high of 94.563, the highest since September 2020.

It was particularly strong against the yen as one dollar bought 113.39 yen, within sight of a three-year low on Monday. As Japan buys the bulk of its oil from abroad, a week of yen means it struggles more with higher prices.

Gold was flat before the data from the US with spot up 0.04% to $1,760 an ounce, in the middle of this month’s range.

HF

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