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GLOBAL MARKETS-Asian stocks track global shares lower, U.S. CPI in focus

reuters.com · 06/09/2022 22:09
GLOBAL MARKETS-Asian stocks track global shares lower, U.S. CPI in focus

By Stella Qiu and Alun John

- Asian shares tracked Wall Street lower on Friday, while the dollar held on to its overnight gains, after rate hike guidance from the European Central Bank and upcoming U.S. inflation data unnerved investors.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 1.2% in early Asian trade, weighed down by drops of 1.5% in Hong Kong .HSI, 0.8% in resources-heavy Australia .AXJO and 1.6% in South Korea .KS11.

Japan's Nikkei .N225 fell 1.2%.

Tech giants listed in Hong Kong .HSTECH were hit hard, with their sub-index opening 2.9% lower. Hong Kong shares of Alibaba BABA fell 3.3% after affiliate Ant Group said it had no plan to initiate an initial public offering. This was a response to media reports that Beijing had approved relaunching the IPO. nL1N2XW1T5

Alibaba shares BABA.N in the U.S. slid 8.1% overnight.

Market sentiment in China has been soured by renewed restrictions in Beijing and Shanghai as new COVID-19 cases have emerged. Multiple districts in Beijing are shutting down entertainment venues, while most citizens in Shanghai are facing new rounds of mass testing to prevent a new outbreak. nL8N2XW66L nL4N2XW2HA

On Thursday, the European Central Bank ended a long-running stimulus scheme and said it would deliver next month its first interest rate rise since 2011, followed by a potentially larger move in September. nL1N2XW0AB

While the ECB decision was widely expected, the possibility of a larger rise in September weighed on sentiment. The euro zone economy is grappling with slowing growth and soaring inflation exacerbated by a months-long Ukraine war.

"Global equities came under pressure after the ECB delivered its guidance, and (ECB President Christine) Lagarde noted upside inflation risks," said analysts at ANZ in a note on Friday.

"And with energy prices still pushing higher, it is not yet clear that inflation has peaked. Fed guidance and policy actions may have to turn more hawkish for longer. Financial markets are nervous."

For months, markets have focused on how fast central banks have been moving to curb inflation. Investors now expect the Federal Reserve to raise interest rates by 50 basis points next week, especially if U.S. consumer price data on Friday confirms elevated inflation.

The consensus forecast sees a year-over-year inflation rate for May of 8.3%, unchanged from April.

Shares on Wall Street tumbled as the market awaited the price data. The S&P 500 .SPX and Nasdaq .IXIC fell more than 2% in their biggest daily percentage declines since mid-May, with mega-cap growth stocks leading the way.

Apple Inc AAPL and Amazon.com Inc AMZN fell 3.6% and 4.2%, respectively.

While some investors have been hopeful that inflation may have peaked, a recent run higher in oil prices to a 13-week high has dented that optimism, boosting the appeal of the safe-haven dollar.

In currency markets, the U.S. dollar =USD retained its broad strength against a basket of major currencies, hovering around its highest level in three weeks. The euro EUR= wallowed at a 2-1/2 week low while the yen JPY= gained 0.16% against the greenback, pulling away from a 20-year low.

On Friday, moves in U.S. Treasuries were largely muted. The yield on benchmark 10-year Treasury notes US10YT=RR rose slightly to 3.0566%, compared with its U.S. close of 3.042% on Thursday.

The two-year yield US2YT=RR, which rises with traders' expectations of higher Fed fund rates, touched 2.8319%, compared with a U.S. close of 2.817%.

Oil prices dipped after parts of Shanghai imposed new lockdown measures. Still, strong gains in refined products supported crude prices near three-month highs.

U.S. crude futures CLc1 fell 0.16% to $121.33 a barrel and Brent LCOc1 settled 0.2% lower at $122.81.

Gold edged down on Friday and headed for a weekly fall, as Treasury yields rose. Spot gold XAU= was traded at $1,846.4949 per ounce. GOL/

World FX rates YTDhttp://tmsnrt.rs/2egbfVh

Global asset performancehttp://tmsnrt.rs/2yaDPgn

Asian stock marketshttps://tmsnrt.rs/2zpUAr4

(Reporting by Stella Qiu and Alun John; Editing by Bradley Perrett)

((yifan.qiu@thomsonreuters.com; 86-10-66271289;))

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