Asian stocks nervous on inflation fears, dollars at year-old highs

A man looks at stock market monitors in Taipei January 22, 2008. REUTERS / Nicky Loh

  • DLR near 3-year high against the yen; 1 year high compared to comparison basket
  • Oil prices are falling, but still near multi-year highs
  • Investors wait for Chinese trade, US CPI numbers
  • Most Asian stock markets were subdued, with Hong Kong closed due to the typhoon

HONG KONG, Oct 13 (Reuters) – Asian stocks were nervous on Wednesday as worries over rising electricity prices, fueling inflation, weighed on sentiment and fueled expectations that the United States will cut its emergency bond purchase program and the dollar at a one-year high would hold.

MSCI’s broadest index for Asia Pacific stocks outside of Japan (.MIAPJ0000PUS) rose 0.1% in early trading and stabilized after falling over 1% the day before, its worst daily performance in three weeks.

Movements were subdued in most markets. Chinese blue chips (.CSI300) remained unchanged, Australia (.AXJO) gained 0.06%, while the Japanese Nikkei (.N225) lost 0.2%.

Hong Kong’s stock exchange was closed in the morning due to a typhoon.

The mood is also fueled by investors waiting for a series of data releases to be released on Wednesday, including Chinese trade data, US consumer price inflation data and minutes of the US Federal Reserve’s monetary policy meeting in September.

The looming start of corporate earnings season also deterred some investors from placing big bets.

“This week, inflation is overshadowing pretty much everything else because it drives Fed expectations one way or the other, and that’s just so dominant,” said Stefan Hofer, LGT’s chief investment strategist in the Asia-Pacific region.

“This season of earnings is also critical because the previous one, particularly in the US, results were very strong, partly because of the base effect. The third quarter could be a little more standard,” he added.

The Federal Reserve is nearing the start of its massive bond-buying program to ease the pandemic, a decision made difficult by growing fears around the world that rising energy costs will fuel inflation while slowing economic recovery.

Oil prices are currently near multi-year highs but have been more stable in Asian morning trading.

Brent crude fell 0.29% to $ 83.18 a barrel, just below the three-year high of $ 84.6, while U.S. crude oil fell 0.2% to $ 80.48 from the seven-year high of $ 82.18 a year ago Monday lost.

Despite growing inflation concerns, optimism about the state of the economic recovery is growing. Three US Federal Reserve decision makers said Tuesday the US economy has recovered enough that the central bank can begin pulling its support out of the time of crisis. Continue reading

As a result, stocks slid on Wall Street overnight. The Dow Jones Industrial Average (.DJI) lost 0.34%, the S&P 500 (.SPX) lost 0.24% and the Nasdaq Composite (.IXIC) lost 0.14%.

The drop in probability also meant the dollar was strong, just below a year high compared to other majors hit the day before.

The dollar index was last at 94.413, just below Tuesday’s 94.563 high, the highest since September 2020.

It was particularly strong against the yen, buying 113.39 yen for one dollar, in sight of Monday’s near three-year low. Since Japan buys most of its oil from overseas, one yen per week means it is struggling even more with high prices.

Gold was stable ahead of US data, with the spot price climbing 0.04% to $ 1,760 an ounce in the middle of this month’s range.

Editing of Lincoln Fest.

Our Standards: The Thomson Reuters Trust Principles.

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