© Reuters. FILE PHOTO: People walk past a screen showing the Hang Seng stock index outside the Hong Kong Stock Exchange, in Hong Kong, China July 19, 2022. REUTERS/Lam Yik
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By Tom Westbrook
SINGAPORE (Reuters) – Asian stock markets held near seven-week lows on Thursday while the dollar hit multi-week highs as a string of strong economic data caused investors to worry that interest rates must continue to rise and remain high to put the brakes on inflation.
MSCI’s broader index of Asia-Pacific stocks outside of Japan hit its lowest level since January 6 in early trading. It was up 0.5% as the morning wore on. Nasdaq futures rose 0.9% after an earnings hit at chip designer Nvidia (NASDAQ:) sent its shares up 9% after hours.
Oil racked up heavy losses overnight and futures held firm to support around $80 a barrel on Thursday. [O/R]
Japanese markets were closed for a national holiday.
Wall Street indices fell overnight and are heading for their worst week of the year so far, as US jobs numbers, inflation, retail sales and manufacturing all declined. [.N]
The minutes of this month’s Federal Reserve meeting, which reinforced a dovish tone, did little to change concerns.
“Markets have been forced to reprice interest rate expectations, not only higher, but also questioning the view that once rate caps are reached, central banks will move quickly to cut rates. of interest,” said ANZ economist Finn Robinson.
“The economic resilience is commendable,” he said.
“But central banks are uncomfortable with current levels of aggregate spending and labor market demand…if upcoming February data for the US confirms robust economic activity, it is hard to see how risk will pick up in the near future. term”. rose 0.4% in Asia.
However, the Bank of Korea offered some relief by ending a year-long streak of non-stop rate hikes with a pause.
The Kospi rose 1% and led gains in the region with most other markets trailing. ()
Earnings season fueled stock moves in Australia. Flag carrier Qantas Airways posted a record first-half profit, but shares suffered their biggest drop in a year, 7.3%, after the company warned fares were likely to fall.
“The market is stretched, so they will panic in the shadows,” said Mathan Somasundaram, founder of analysis firm Deep Data Analytics in Sydney.
“We’re seeing more and more evidence that consumers are stretched, consumer spending is going to come down,” he said, pointing to a strong result from grocer Woolworths that suggested more people are cooking as restaurant prices rise.
Forex trading calmed down for Japan holidays. The dollar held close to its strongest levels since early January, though unable to break new highs.
The Australian and New Zealand dollars moved a bit above strong support levels, with the latter rising 0.4% to $0.6832 and rising by the same margin to $0.6242. [FRX/]
The euro stabilized at $1.0619, while the yen, which has been falling, last traded at 134.80 to the dollar.
Speculations abound that a policy change is near in Japan. Inflation data to be released on Friday and the appearance of Bank of Japan gubernatorial candidate Kazuo Ueda on Monday offer clues as to the timing.
US Treasuries rose overnight, but a hawkish tone in the Fed minutes wiped out the gains. The ten-year notes were not traded in Asia due to the Tokyo holiday.
Gold stabilized at $1,825 an ounce.
Final figures for European inflation and US growth will be released later, although no major changes to the preliminary figures are expected. Fed officials Mary Daly and Raphael Bostic will also appear later Thursday.