Asia’s major stock indexes slipped on Thursday, knocked back by more gloomy predictions from the US Fed on inflation, weakening demand in China and continuing geopolitical tensions.
Shares across the region wobbled while the dollar hit a near three-month peak after a spate of economic data overnight appeared to support Federal Reserve Chairman Jerome Powell’s hawkish guidance on further interest rate increases.
In his second day on Capitol Hill, Powell stuck to his message of higher and potentially faster interest rate hikes, but emphasised that debate was still underway with a decision hinging on data to be issued before the US central bank’s policy meeting in two weeks.
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That chink of hope, though, had an impact in Japan where its benchmark share average hit a six-and-a-half-month high, extending gains for a fifth straight session, where expectations of no imminent change to Bank of Japan stimulus also buoyed risk sentiment.
Overnight strength among US technology shares lifted Japanese peers too, while the yen’s decline to a multi-month low provided broader support even as the currency recouped some losses in the current session.
The Nikkei share average edged up 0.63%, or 178.96 points, to close at 28,623.15, while the broader Topix gained 0.97%, or 19.88 points, to 2,071.09.
China and Hong Kong stocks fell as a slowdown in consumer inflation pointed to a weak economic recovery, while lingering geopolitical tensions curbed risk appetite.
China’s consumer price index (CPI) in February was 1.0% higher than a year earlier, rising at the slowest pace in a year. That compared with a 2.1% annual rise seen in January.
Also dampening sentiment, President Xi Jinping said on Wednesday that China needs to improve its use of defence resources such as technology, supply chain and national reserves “to strengthen its army and win wars”.
China’s blue-chip CSI 300 Index closed down 0.4%, while the Shanghai Composite Index lost 0.22%, or 7.15 points, to end at 3,276.09.
Hong Kong’s Hang Seng benchmark was down 0.63%, or 125.51 points, at 19,925.74, and the China Enterprises Index dropped 1.2%. The Shenzhen Composite Index on China’s second exchange slipped 0.07%, or 1.58 points, to 2,113.33.
Elsewhere across the region, Singapore, Seoul, Wellington, Taipei, Mumbai and Manila fell. Sydney, Bangkok and Jakarta rose.
MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.1%, after falling 1.4% the previous session.
Globally, the caution was set to extend to Europe ahead of the release of the February US payrolls data, with pan-region Euro Stoxx 50 futures dipping 0.2%. Both S&P 500 futures and Nasdaq futures were off 0.2%.
In the United States, data released overnight painted a picture of a sturdy economy, doing little to assuage fears the Fed will ease up on its relentless rate hikes.
Job openings remain elevated, private payrolls beat consensus estimates and demand for home loans increased despite higher mortgage rates.
The major US stock indexes oscillated between modest gains and losses throughout the day, with the Nasdaq joining the S&P 500 in positive territory at the closing bell and the Dow posting a modest loss.
The US dollar index, measuring the greenback’s value against a basket of major peers, hovered close to a three-month top at 105.57. It, however, lost 0.4% to the Japanese yen at 136.78 per dollar.
On Thursday, the two-year Treasury yields held close to 15-year highs at 5.0600%, while the benchmark 10-year yields were mostly steady at 3.9953%.
A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, was at a negative 108.2 basis points, the most inverted since 1981. Such an inversion is seen as a reliable recession indicator.
Oil prices were largely steady on Thursday. US crude held at $76.64 a barrel. Brent crude was largely unchanged at $82.66 per barrel.
Gold was slightly higher. Spot gold was traded at $1815.95 per ounce.
Tokyo – Nikkei 225 > UP 0.63% at 28,623.15 (close)
Hong Kong – Hang Seng Index < DOWN 0.63% at 19,925.74 (close)
Shanghai – Composite < DOWN 0.22% at 3,276.09 (close)
London – FTSE 100 < DOWN 0.76% at 7,869.40 (0935 GMT)
New York – Dow < DOWN 0.18% at 32,798.40 (Wednesday close)
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