Asian stocks were volatile as investors were cautious ahead of US inflation data By Reuters
Written by Ankur Banerjee
SINGAPORE (Reuters) – Asian shares were weaker in early trade on Wednesday as markets eyed US inflation readings, while the yen dipped below 160 per dollar, keeping traders wary of another round of intervention by Japanese authorities.
The risk stance was also cut as hawkish comments from Federal Reserve officials kept expectations of a near-term US rate cut to boost the dollar.
MSCI’s broad index of Asia-Pacific shares outside Japan was little changed at 566.55 in choppy trade, far from the two-year high of 573.38 touched last week. The index still rose 3.5% in June, marking the fifth consecutive month of gains.
and Taiwanese stocks rose sharply, led by chipmakers, following a rally in tech-heavy Nasdaq on Tuesday, while Nvidia (NASDAQ: this market.
Chinese shares, however, lagged behind the blue-chip CSI300 Index and were both down 0.2% and headed for a 4% decline for the month.
Hong Kong also fell by 0.16%.
On the US monetary policy side, Fed officials urged patience in interest rate cuts, with governor Lisa Cook saying the central bank is on track to cut rates if economic performance meets expectations. But Cook declined to say when the Fed would be able to act.
US Federal Reserve Governor Michelle Bowman reiterated her view that holding the policy rate steady “for some time” will probably be enough to control inflation.
Opinions and data showing a stable housing market have kept expectations of when and how much the Fed will cut rates. Markets are pricing in 47 basis points of easing this year, with a cut in September indicated a 66% chance, the CME FedWatch tool showed.
“The main path of inflation remains the same, but the journey of the last mile has been difficult and tricky,” Selena Ling, head of research and strategy at OCBC said in the paper.
Traders are eagerly awaiting Friday’s release of the US personal consumption expenditures (PCE) price index – the Fed’s preferred measure of inflation, while economists polled by Reuters expect annual growth to ease to 2.6% in May.
“Preventing new shocks in energy markets and/or supply chains, reducing incoming inflation and rebalancing the labor market will give the data-dependent Fed a window to cut twice this year,” said OCBC’s Ling.
In the currency market, the , which measures the US unit against six peers, was stable at 105.64, while the euro was at $ 1.0715.
The Australian dollar rose after data showed consumer inflation rose to a six-month high in May, leading markets to discount the prospect of another rate hike in early August. it was last up 0.39% at $0.6674.
The yen was fetching 159.79 per dollar and was trading in strong territory as it trails the key level of 160 which some traders say could bring another round of intervention.
The yen touched a 34-year low of 160.245 per dollar on April 29, prompting Tokyo to spend around ¥9.8 trillion in late April and early May to finance the currency.
The yen’s latest slide came after the Bank of Japan’s (BOJ) June policy meeting, where policymakers disappointed investors who had been betting on a big cut in central bank bonds.
The BOJ is playing down signs that its rate-tightening program in July could be bigger than markets think, and could be accompanied by interest rate hikes, as it mounts a sharp reversal in its growing monetary policy.
In commodities, oil prices were little changed in Asian trade, with futures down at $85.02 a barrel, while US West Texas crude futures were at $80.9 per barrel.
Gold prices fell to $2,318 per ounce but are still up 12% this year as they hit a record high of $2,449.89 last month. [GOL/]
