Asian stocks fall as investors brace for inflation report

TOKYO: Stocks fell across Asia and the dollar stabilized on Wednesday as investors were hesitant to take action ahead of the release of US inflation data that could signal the Federal Reserve’s appetite for hikes more aggressive rates.
The Consumer Price Index (CPI) report will be released at 12:30 GMT, with markets watching for signs of slowing inflation in July despite surprisingly strong US jobs figures last week.
The market is currently pricing in a 69.5% chance of a 75 basis point rate hike at the next Fed meeting. Economists polled by Reuters expect the CPI to show headline inflation of 8.7% year-on-year, well above the Fed’s 2% target but down from the 9, 1% from last month.
MSCI’s broadest index of Asia-Pacific stocks outside Japan fell 1.31%, while Japan’s Nikkei extended the previous day’s losses and closed down 0.65%.
South Korea’s KOSPI lost 0.95%, Australia’s AXJO fell 0.5% and Taiwan’s TAIEX fell 0.74%.
European equity futures reported further losses before markets opened. FTSE 100 futures were down 0.31% and Euro Stoxx 50 futures were down 0.38%.
“I don’t think we’re through the woods of the bear market yet – recession risks are looming and I don’t think the Fed is done with its aggressive belt-tightening,” said market strategist David Chao. worldwide for Asia-Pacific excluding Japan. at Invesco.
“I don’t think the markets have fully discounted those variables. This week’s inflation data will certainly give us more clarity on the Fed’s near-term policy outlook.”
Slips in Asian markets followed Wall Street, which closed Tuesday with all three major indexes down.
The S&P 500 fell 0.42%, the Dow Jones Industrial Average fell 0.18% and the Nasdaq Composite lost 1.19%.
The dollar reversed its losses overnight and was trading flat in Asia. The dollar index, which measures the safe-haven greenback against six major peers, was at 106.3.
“A strong CPI print this week could mean the Fed is back on its aggressive rate hike path, which would strengthen the USD,” Chao said.
Oil prices fell after the end of an overnight surge. Brent crude futures fell 78 cents to $95.53 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 56 cents to $89.94.
Gold also pared its gains and fell 0.33% to $1,788.30 an ounce. It briefly broke the $1,800 barrier overnight for the first time in over a month.
The cryptocurrency bitcoin, which often tracks tech stocks, fell 1.15% to $22,880.

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