Inflation update in the USA: Asian stocks fall ahead of Asian stocks

BEIJING (AP) — Asian stocks sank Monday ahead of a U.S. inflation update traders worry might lead to more interest rate hikes.

Tokyo, Hong Kong, and Seoul all declined. Shanghai advanced. Oil prices declined.

Traders believe Tuesday’s inflation data might show an increase in U.S. prices. This could encourage the Federal Reserve to ease off They are trying to increase business activity and reduce hiring. They are worried Strong reading The latest revisions to the 2022 inflation estimates have strengthened plans to keep rates high, and perhaps increase them.

A strong inflation figure “can move through risk assets like a wrecking ball,” said Stephen Innes of SPI Asset Management in a report.

The Nikkei225 in Tokyo fell 1% to 27,392.23, while the Shanghai Composite Index rose 0.5% to 3,278.07. The Hang Seng (Hong Kong) lost 0.5% and fell to 21,090.70.

The Kospi in Seoul declined 0.9% to 2,448.15 and Sydney’s S&P-ASX 200 shed 0.3% to 7,408.50.

India’s Sensex closed 0.6% lower at 60,334.54. New Zealand, Singapore and Bangkok both declined while Jakarta and Bangkok increased.

On Friday, Wall Street’s benchmark S&P 500 index rose 0.2% to 4,090.46. The index finished the week with a 1.1% loss, its largest weekly drop since December.

The Dow Jones Industrial Average grew 0.5% to 33.869.27. The Nasdaq dropped less than 0.1% to 11,718.12.

Since last month, stocks have rallied in hopes that the Fed will begin cutting rates by late this year. This is despite Chair Jerome Powell’s warnings that rates will remain elevated for a long time until inflation pressures subside.

To cool inflation, other central banks in Europe or Asia have also raised rates.

Wall Street raised its forecast of how high the Fed might raise rates after Powell said last week there is a “significant road ahead” to get inflation down to its 2% target. He warned against expecting inflation to “go away quickly and painlessly.”

The U.S. government has been revised December inflation to 0.1% The previous month’s decline was 0.1%, which is higher than the earlier estimate. From 0.1%, the November figure was increased to 0.2%.

Traders anticipate Tuesday’s report that consumer prices increased 0.5% in January compared to the previous month.

The yield on the 10-year Treasury Bond, or the difference in market price and payout at maturity, has increased to 3.733% on Friday from the previous 3.66%.

The yield on the Treasury two-year rose to 4.50%, from 4.48%. It was at 4.08% a week ago, and is close to its highest level since November.

Equities analysts have cut forecasts of first-quarter earnings for companies in the S&P 500 by 4.5% due to the impact of inflation and slowing economic activity, according to strategists at Credit Suisse.

News Corp. dropped 9.4% after The Wall Street Journal’s owner and other media reported lower quarterly results than expected. Expedia reported a lower profit and revenue in the most recent quarter than expected, losing 8.6%.

Oil prices declined after a Friday surge. Russia said it would cut production Next month, it will be 500,000 barrels a day. To punish Moscow’s invasion of Ukraine, the West has set a maximum amount that customers can pay for Russian crude oil.

The benchmark U.S. crude fell 89c to $78.83 per barrel in electronic trading on New York Mercantile Exchange. On Friday, the contract rose $1.66 and reached $79.72. Brent crude oil, which is the price basis for international oil trade, fell 87 cents per barrel to $85.52 in London. It rose $1.89 to $86.39.

From Friday’s 131.50 yen, the dollar gained to 132.10 Japanese yen. From $1.0672, the euro fell to $1.0666.