Asian shares mostly fell on Thursday tracking US losses ahead of the release of crucial inflation data later in the day that will help chart the Fed’s rate cut timeline.
Investors are awaiting the release of the US Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s most-watched inflation indicator, which is expected to influence the central bank’s upcoming policy decisions.
Expectations for cuts to US interest rates have shifted to later this year, as recent inflation data has come in hot and Fed policymakers have taken a wait-and-see attitude, calling for more time and data showing that inflation is moving towards their two percent goal.
Analysts say the PCE figures, and other US economic indicators coming Thursday, will likely influence market sentiment.
“The recent data is ‘noise’ and should be ignored outside of its impact for very short-term market movements,” Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, told Bloomberg.
“We are more interested in the PCE data,” he said.
The world’s biggest economy will also report consumer and jobless figures.
“Given its status as a real-time gauge of the jobs market, the initial jobless claims release can sway investor perceptions and contribute to market volatility,” Stephen Innes, of SPI Asset Management, said in a note.
Wall Street’s main indices retreated on Wednesday, although losses on both the Dow and S&P 500 were modest.
“Stocks buoyed by A.I. euphoria encountered challenges in the final days of February as inflation concerns resurfaced, prompting investors to reckon with the prospect of higher interest rates likely to endure for an extended period,” Innes said.
“Indeed, investors have been in a state of cautious contemplation as they grapple with the shifting dynamics in interest rates, which have transformed from favourable trade winds to subtly challenging headwinds.”
New York Fed boss John Williams said Wednesday the central bank has “a ways to go” in its inflation fight, according to Bloomberg.
Eurozone inflation figures are due Friday.
Meanwhile, cryptocurrency bitcoin topped $60,000 thanks to feverish demand.
Bitcoin has been buoyed by US moves toward creating exchange-traded funds (ETFs) to track the price of the world’s most popular cryptocurrency, which would expand its potential investor pool by allowing the public to place bets without directly purchasing the digital unit.
It was trading above $61,000 Thursday morning, edging in on its November 2021 peak.
Tokyo stocks opened lower on Thursday, with the Japanese market lacking “clues for buying stocks after falls in US shares”, Matsui Securities said.
Hong Kong and Shanghai were trading higher in early trade, the latter up more than one percent.
Seoul, Wellington and Jakarta were lower, while Singapore, Manila and Kuala Lumpur were up. Sydney and Taipei were flat.
Key figures around 0230 GMT
Tokyo – Nikkei 225: DOWN 0.6 percent at 38,985.70
Hong Kong – Hang Seng Index: UP 0.5 percent at 16,610.74
Shanghai – Composite: UP 1.2 percent at 2,992.66
Euro/dollar: DOWN at $1.0834 from $1.0840 on Wednesday
Dollar/yen: DOWN at 149.95 yen from 150.70 yen
Pound/dollar: UP at $1.2664 from $1.2661
Euro/pound: DOWN at 85.55 pence from 85.60 pence
Brent North Sea Crude: DOWN 0.1 percent at $83.59 per barrel
West Texas Intermediate: DOWN 0.1 percent at $78.48 per barrel
New York – Dow: DOWN 0.1 percent at 38,949.02 (close)
London – FTSE 100: DOWN 0.8 percent at 7,624.98 (close)
