Asian markets follow Wall St lower ahead of US inflation report

Asian markets follow Wall St lower ahead of US inflation report

Traders will be poring over US inflation data later Thursday, hoping for an idea abou the Federal Reserve's interest rate plans
Traders will be poring over US inflation data later Thursday, hoping for an idea abou the Federal Reserve's interest rate plans. Photo: Kevin Dietsch / GETTY IMAGES NORTH AMERICA/Getty Images via AFP
Source: AFP

PAY ATTENTION: Have you recorded a funny video or filmed the moment of fame, cool dance, or something bizarre? Inbox your personal video on our Facebook page!

Stocks fell Thursday ahead of much-anticipated US inflation data, which comes against a backdrop of renewed concerns that the Federal Reserve could announce another interest rate hike before the end of the year.

The feel-good factor that characterised much of July has given way to uncertainty about the US central bank's plans following a mixed jobs report and warnings from policymakers that more was needed to finally get prices under control.

Ongoing weakness in China's economy -- and lack of concrete action by authorities to address it -- are also taking their toll on investor sentiment, helping to drive a retreat in global markets in recent weeks.

All eyes are on the release later Thursday of the US consumer price index for last month, a closely watched gauge of inflation that plays a key role in the Fed's decision-making on monetary policy.

Read also

How China is responding to economic challenges

While rate hikes have dampened steep price rises -- from a four-decade high of 9.1 percent in June last year to three percent now -- observers warned officials would find it harder to get inflation back down to its two percent target.

After falling for 12 straight months, forecasts are for a slight uptick in the CPI, partly because of rising oil costs.

PAY ATTENTION: Click “See First” under the “Following” tab to see Briefly News on your News Feed!

However, core inflation is tipped to ease again, which commentators said should allow the Fed to stand pat on rates at its next meeting in September.

The bank hiked in July but indicated that could be the last such move, after more than a year of tightening.

Fawad Razaqzada, at City Index and Forex.com said a "small beat" would be tolerable for investors.

"A goldilocks outlook in the US is what stock market investors on Wall Street have been enjoying this year -- until the recent weakness," he said in a note.

Read also

Asian markets struggle after more weak China data

"They will be looking for signs that the health and sentiment of the consumer remains positive, enough not to increase the risks of a further Fed rate increase, and yet not too depressing to raise recession alarm bells."

All three main indexes on Wall Street ended in the red Wednesday, dragged by tech firms, and Asia largely followed suit.

Hong Kong, Sydney, Seoul, Singapore, Wellington, Taipei and Manila were all down, though Tokyo, Shanghai and Jakarta edged up slightly.

Investors are keeping tabs on China, hoping for measures to support the ailing economy, after news that the country had slipped into deflation for the first time in more than two years and exports plunged at their fastest pace since the early days of the pandemic.

There was also a little nervousness after President Joe Biden signed an executive order directing the Treasury to restrict certain US investments in China in sensitive high-tech sectors including semiconductors, quantum computing and artificial intelligence.

Read also

China slips into deflation as post-Covid recovery falters

Beijing hit out at the move, saying it "severely disrupts the security of global industrial and supply chains".

The order comes even as the two sides try to iron out some differences after years of tensions.

Oil prices dipped slightly but held their recent gains, with both main contracts at multi-month highs, on worries about Russian supplies following a Ukrainian attack on one of the country's tankers.

Output cuts by Moscow and OPEC giant Saudi Arabia were also providing strong support to the market, analysts said.

Key figures around 0230 GMT

Tokyo - Nikkei 225: UP 0.4 percent at 32,338.95 (break)

Hong Kong - Hang Seng Index: DOWN 0.6 percent at 19,163.41

Shanghai - Composite: UP 0.1 percent at 3,248.13

Euro/dollar: UP at $1.0978 from $1.0975 on Wednesday

Pound/dollar: DOWN at $1.2718 from $1.2720

Euro/pound: UP at 86.30 from 86.26 pence

Dollar/yen: UP at 143.80 yen from 143.38 yen

Read also

Asian markets struggle as traders fret over another Fed hike

West Texas Intermediate: DOWN 0.3 percent at $84.17 per barrel

Brent North Sea crude: DOWN 0.3 percent at $87.32 per barrel

New York - Dow: DOWN 0.5 percent at 35,123.36 (close)

London - FTSE 100: UP 0.8 percent at 7,587.30 (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.