Asian Stock Market: Inflation, covid woes weigh underpin bearish bias

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  • Equities in Asia-Pacific zone track Wall Street’s losses amid sluggish markets.
  • Strong US inflation, fears of fallout from Russia-Ukraine war and China’s struggle with COVID-19 weigh on sentiment.
  • Inflation expectations eased in Australia, rose in New Zealand, BOJ Opinion Summary favor easy money policies.
  • India CPI, US PPI will be eyed for fresh impulse.

Markets in the Asia-Pacific region remain downbeat as traders struggle to overcome fears of inflation and coronavirus amid a sluggish session during early Thursday.

While portraying the mood, MSCI’s index of Asia-Pacific shares ex-Japan drops 1.4% whereas Japan’s Nikkei 225 print 1.25% intraday loss by the press time.

Worries over inflation bolstered after the US Consumer Price Index (CPI) data crossed softer forecasts for April, published the previous day. That said, the US Consumer Price Index (CPI) rose to 8.3% YoY versus 8.1% expected and 8.5% prior. More importantly, the CPI ex Food & Energy, better known as Core CPI, crossed 6.0% forecasts with 6.2% annual figures, versus 6.5% previous readouts.

Following the data, during early Thursday in Asia, the previously hawkish Federal Reserve Bank of St. Louis James Bullard mentioned that he ”won’t emphasize single inflation report too much but inflation is more persistent than many have thought.”

It should be observed that contrasting signals concerning the covid conditions in China and the policymakers’ readiness for more measures to uplift the world’s second-largest economy fail to recall buyers from Beijing. The same weighs on the stocks in Australia and New Zealand. Australia’s Consumer Inflation Expectations dropped more than forecast in May while the Reserve Bank of New Zealand’s (RBNZ) inflation expectations for the second quarter (Q2) rose to 3.28% versus 3.27% prior.

Elsewhere, Indonesia retail sales came out weak for March and drown IDX Composite. On the same line is South Korea’s KOSPI which prints 0.80% intraday loss by the press time as China, South Korea and Japan quote fears from the Ukraine-Russia war.

On a broader front, the US 10-year Treasury yields dropped 1.4 basis points (bps) to 2.92%, around a two-week low by the press time. In doing so, the benchmark bond coupon drops for the fourth consecutive day, bracing for the first negative week in 10. Elsewhere, S&P 500 Futures rise 0.30% intraday gains, in contrast to Wall Street’s losses.

Moving on, India’s Consumer Price Index (CPI) for April will precede weekly prints of the US Jobless Claims and monthly Producer Price Index (PPI) to decorate today’s calendar but major attention will be given to the qualitative catalysts, like Brexit, covid and geopolitics, for clear directions.

Read: S&P 500 Futures rebound from yearly low, yields eye first weekly loss in 10 amid mixed clues