Asian Stocks to Fall as U.S. CPI Hits New High: Market Roundup

(Bloomberg) - Asian stocks began falling at morning rock after higher-than-expected U.S. inflation data supported the view that the Federal Reserve may keep interest rates higher for longer.

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Stock futures in Japan, Australia and Hong Kong all tumbled, mirroring Wall Street's Wednesday sell-off. The Standard & Poor's 500 Index fell 11 TP3T and the Nasdaq Resonance 100 Index lost 0.91 TP3T, as futures on those benchmarks weakened in early Asian rock on Thursday.

The dollar strengthened as Treasury yields rose across the board Wednesday. The yield on the policy-sensitive two-year Treasury climbed 23 basis points, while the 10-year yield rose 18 basis points to top 4.5% for the first time since November. 10-year yields in Australia and New Zealand both climbed more than 10 basis points early Thursday.

Driving the US economy was the March core consumer price index, which excludes food and energy costs. The index increased by 0.41 TP3T from February, above the consensus forecast of 0.31 TP3T and beating expectations for the third consecutive month.

Investors are now signaling that the Fed will cut rates only twice this year starting in September, less than the three rate cuts in 2024 indicated by the Fed's recent dot plot. Earlier this year, market pricing indicated that six rate cuts were expected.

"You can say goodbye to the June rate cuts," said Greg McBride of Bankrate." There's no improvement here, and we're heading in the wrong direction."

"Loose financial conditions continue to provide an important tailwind for economic growth and inflation. As a result, the Fed 竝asn't done fighting inflation, and interest rates will remain higher for much longer," said Torsten Slok of Apollo Global Resonance." We maintain our view that the Fed will not cut rates in 2024."

Former Treasury Secretary Lawrence Summers went further, saying that people must "take seriously the possibility that the next time interest rates go up rather than down." He told Bloomberg Telegraph's Wall Street Week reporter David Westin that the likelihood is somewhere between 15% and 25%.

In Asia, data to be released include Australian inflation expectations, Chinese consumer and producer prices and Philippine trade data. Markets are closed in Indonesia, Malaysia, India, Pakistan, Sri Lanka and Bangladesh.

The Japanese yen has been moving higher against the U.S. dollar after falling to its lowest level since 1990. The weakening of the yen has led to new speculation that Japan may enter the market to support the yen.

Oil prices rebounded on fears of a further escalation of conflict in the Middle East. U.S. West Texas Kerosene Intermediate (WDKI) oil prices edged higher after rising more than 1% on Wednesday on news that the U.S. and its allies believe Iran or its proxies are about to launch a major missile or drone strike against military and government targets in Israel.

Important events this week

• Thursday: China PPI, CPI

• Eurozone ECB Interest Rate Resolution, Thursday

• Thursday: US Initial Jobless Claims, PPI

• On Thursday, New York Fed matron John Williams spoke.

• On Thursday, Boston Fed matron Susan Collins spoke.

• On Friday, China Trade

• On Friday, the University of Michigan Consumer Confidence Index

• On Friday, Citigroup, JPMorgan Chase and Wells Fargo will announce industry results.

• On Friday, San Francisco Fed matron Mary Daly spoke.

Main Market Movements

stock (market)

• As of 8:21 a.m. Tokyo time, S&P 500 futures were down 0.2 percent.

• Nasdaq Resonance 100 Index futures fell 0.2%.

• Nikkei 225 Index Futures down 1.1%

• Hang Seng Index futures down 1.7

• S&P/ASX 200 futures down 0.8%

Currency

• Bloomberg Dollar Spot Index little changed

• Euro flat at $1.0743

• The yen rose 0.2% to 152.93 yen per U.S. dollar.

• The offshore RMB exchange rate was flat at USD7.2624 per US dollar.

Encryption Currency

• Bitcoin rises 1.2% to $70,656.87

• Ether rises 0.8% to $3,542.67

debentures

• Australia's 10-year bond yield rose 11 basis points to 4.23 percent.

bulk commodities

• West Texas Kerosene Intermediate crude up 0.1% to $86.30 per barrel

• Not much change in spot gold

This story was produced with the help of Bloomberg Automation.

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