Asian shares inched lower Thursday following a tech-led sell-off on Wall Street as investors await US monthly inflation data that will help shape the outlook for the Federal Reserve’s next steps.
(Bloomberg) — Asian shares inched lower Thursday following a tech-led sell-off on Wall Street as investors await US monthly inflation data that will help shape the outlook for the Federal Reserve’s next steps.
Equities in Japan and Hong Kong stock futures fell while Australia shares were largely flat. The S&P 500 declined 0.7% Wednesday, while the Nasdaq 100 dropped 1.1%, weighed down by a 4.7% drop for Nvidia Corp., as investors rethink the artificial-intelligence frenzy that has helped propel tech shares higher this year. US futures ticked higher in early Asian trading.
Long-dated Treasury yields fell as investors showed fresh demand for 10-year paper. On Wednesday, a $38-billion auction for 10-year Treasuries was awarded at 3.999%, the third straight new issue to pay a fixed rate of less than 4%. The two-year yield, which is more sensitive to interest rates, rose six basis points. Australian and New Zealand bond yields were slightly higher in early Thursday trading.
Those movements come ahead of July’s consumer price index data due later Thursday. Economists anticipate a slight increase in the headline figure, in part linked to higher oil prices, while core inflation is expected to fall, extending a downward trend that Bloomberg Economics believes will support a rate pause when the Fed next meets in September.
Even if inflation overshoots expectations, the Fed will likely feel its policy is restrictive enough as manufacturing struggles and the jobs market shows signs of softening, according to Fawad Razaqzada, a market analyst at City Index and Forex.com. That means a “small beat” wouldn’t matter too much, he noted.
“A goldilocks outlook in the US is what stock market investors on Wall Street have been enjoying this year – until the recent weakness,” Razaqzada said. “They will be looking for signs that the health and sentiment of the consumer remains positive, enough not increase the risks of a further Fed rate increase, and yet not too depressing to raise recession alarm bells.”
Currency markets were little changed in early Asian trading after a mild rally in offshore yuan on Wednesday. The Bloomberg dollar index was steady and the yen was little changed.
Investors were also focused on rising energy prices. Oil eased lower after two days of gains greater than 1% that pushed crude to a nine-month high. Attention was also fixed on surging European natural gas prices after a 28% rise Wednesday that was attributed to the possibility worker strikes in Australia could reduce supply. Citigroup Inc. analysts predict this could cause European gas and Asian LNG contracts for January to double.
The price of rice also surged to the highest level in almost 15 years, as dry weather threatens Thailand’s crop.
In US corporate earnings, Walt Disney Co. reported profits that exceeded expectations and said it will raise the prices of its streaming services, including a 27% increase for the advertising-free version of the flagship Disney+. The company’s shares rose in after-hours trading on the news. Illumina Inc. fell after the DNA-sequencing firm cut its profit outlook and Wynn Resorts Ltd.’s earnings per share beat analyst forecasts.
Elsewhere, gold edged higher after falling to its lowest level in a month with the precious metal trading at around $1,916 per ounce.
Key events this week:
- India rate decision, Thursday
- US initial jobless claims, CPI, Thursday
- Atlanta Fed President Raphael Bostic pre-recorded remarks for employment webinar, Thursday
- UK industrial production, GDP, Friday
- US University of Michigan consumer sentiment, PPI, Friday
Some of the main moves in markets:
- S&P 500 futures rose 0.3% as of 9:12 a.m. Tokyo time. The S&P 500 fell 0.7%
- Nasdaq 100 futures rose 0.3%. The Nasdaq 100 fell 1.1%
- Hang Seng futures fell 0.4%
- Japan’s Topix fell 0.3%
- Australia’s S&P/ASX 200 was little changed
- Euro Stoxx 50 futures rose 0.6%
- The Bloomberg Dollar Spot Index was little changed
- The euro was unchanged at $1.0974
- The Japanese yen was little changed at 143.77 per dollar
- The offshore yuan was little changed at 7.2281 per dollar
- Bitcoin rose 0.3% to $29,576.5
- Ether rose 0.2% to $1,854.67
- The yield on 10-year Treasuries was little changed at 4.01%
- Japan’s 10-year yield advanced two basis points to 0.585%
- Australia’s 10-year yield advanced three basis points to 4.02%
- West Texas Intermediate crude fell 0.3% to $84.16 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
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