Asian markets drop on rate fears as US inflation runs hot

Asian markets drop on rate fears as US inflation runs hot

Bank of Japan nominee Kazuo Ueda's comments that he backed its ultra-loose monetary policy is weighing on the yen
Bank of Japan nominee Kazuo Ueda's comments that he backed its ultra-loose monetary policy is weighing on the yen. Photo: Philip FONG / AFP
Source: AFP

PAY ATTENTION: Never miss breaking news – join Briefly News' Telegram channel!

Asian markets sank Monday following a Wall Street selloff, as forecast-beating US inflation data reinforced expectations the Federal Reserve would continue to ramp up interest rates for some time.

The report on the personal consumption expenditures price index followed blockbuster jobs figures and data showing prices coming down slower than hoped.

This month's readings have wiped out optimism that the Fed will be able to soon pause its monetary tightening and possibly cut borrowing costs before the end of the year.

Traders will be keeping a close eye on comments from bank officials this week.

"We have six voting members on the (policy board) scheduled to appear this week -- ample opportunity for officials to air their views on the latest data and, more importantly, the implications for their policy outlooks," said SPI Asset Management's Stephen Innes.

Read also

Asian markets mixed, Tokyo boosted by BoJ nominee

"But given the rude health of the US economy and with inflation flames reigniting, it's challenging to envision Fed commentary veering in anything but a more hawkish direction.

PAY ATTENTION: Follow us on Instagram - get the most important news directly in your favourite app!

"Hence it could be difficult for the market to find much comfort this week unless the sentiment data surprises to the downside."

Some figures have already suggested they are open to hiking by 50 basis points at the next gathering, and several said they saw room for further tightening after Friday's data release.

All three main indexes on Wall Street ended deep in the red Friday, and Asia followed suit on Monday.

Hong Kong, Tokyo, Sydney, Shanghai, Seoul, Singapore, Manila, Jakarta and Wellington were all in the red.

Chris Weston, of Pepperstone Group, said in a note: "The clouds of uncertainty remain with us -- the market's consensus view that inflation would head lower through the year has clearly been challenged."

Read also

Japan inflation hits 4.2 percent in January

The prospect of more Fed rate hikes sent the dollar surging against its peers Friday and it held those gains in Asian business, sitting at a two-year high versus the yen.

Adding to the yen's weakness were comments from the man expected to take over as head of the Bank of Japan indicating he will maintain an ultra-loose monetary policy for now.

That came even as data showed inflation at a four-decade high.

Kazuo Ueda is due to talk to lawmakers again Monday, and traders will be poring over his remarks for more insight into his plans for taming inflation and boosting the torpid economy.

Key figures around 0230 GMT

Tokyo - Nikkei 225: DOWN 0.2 percent at 27,405.37 (break)

Hong Kong - Hang Seng Index: DOWN 0.2 percent at 19,979.12

Shanghai - Composite: DOWN 0.1 percent at 3,264.37

Dollar/yen: DOWN at 136.17 yen from 136.46 yen on Friday

Read also

Asian markets mixed but little joy as traders eye more Fed hikes

Euro/dollar: UP at $1.0558 from $1.0552

Pound/dollar: UP at $1.1958 from $1.1938

Euro/pound: UP at 88.31 pence from 88.30 pence

West Texas Intermediate: UP 0.1 percent at $76.40 per barrel

Brent North Sea crude: UP 0.1 percent at $82.88 per barrel

New York - Dow: DOWN 1.0 percent at 32,816.92 (close)

London - FTSE 100: DOWN 0.4 percent at 7,878.66 (close)

PAY ATTENTION: Сheck out news that is picked exactly for YOU ➡️ click on “Recommended for you” and enjoy!

Source: AFP

Authors:
AFP avatar

AFP AFP text, photo, graphic, audio or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP news material may not be stored in whole or in part in a computer or otherwise except for personal and non-commercial use. AFP will not be held liable for any delays, inaccuracies, errors or omissions in any AFP news material or in transmission or delivery of all or any part thereof or for any damages whatsoever. As a newswire service, AFP does not obtain releases from subjects, individuals, groups or entities contained in its photographs, videos, graphics or quoted in its texts. Further, no clearance is obtained from the owners of any trademarks or copyrighted materials whose marks and materials are included in AFP material. Therefore you will be solely responsible for obtaining any and all necessary releases from whatever individuals and/or entities necessary for any uses of AFP material.