Indian Morning Briefing: Asian Markets Lower as Fed Rate Hike Fears Linger - Update

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Update fills foreign exchange rates table. 
 
GLOBAL MARKETS 
DJIA         33646.50    -38.29  -0.11% 
Nasdaq       11929.34   -102.54  -0.85% 
S&P 500       4091.95    -16.99  -0.41% 
FTSE 100      7824.84     39.12   0.50% 
Nikkei Stock 28108.76     26.06   0.09% 
Hang Seng    20138.30   -171.56  -0.84% 
Kospi         2551.67      1.03   0.04% 
SGX Nifty*   17849.50    -30     -0.17% 
*April contract 
 
USD/JPY 133.24-25  +0.06% 
Range   133.29   132.95 
EUR/USD 1.0994-97  +0.03% 
Range   1.1008   1.0989 
 
CBOT Wheat May $6.794 per bushel 
Spot Gold    $2,016.65/oz  0.1% 
Nymex Crude (NY) $83.27   $1.74 
 
 
U.S. STOCKS 

U.S. stocks slipped Wednesday, giving up gains from earlier in the session.

The S&P 500 fell 16.99 points, or 0.4%, to 4091.95, while the Nasdaq Composite lost 102.54 points, or 0.9%, to 11929.34. The Dow Jones Industrial Average gave up 38.29 points, or 0.1%, to 33646.50.

The consumer-price index, a closely watched measure of inflation, rose 5% last month, the Labor Department said Wednesday. The report showed inflation is continuing to pull back from its multidecade high hit last June.

Wednesday's consumer inflation report "keeps the Fed on track for another rate hike while trying to strike a delicate balance," said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office.

 
 
ASIAN STOCKS 

Japanese stocks were lower in early trade, as the yen strengthened versus the dollar following data showing U.S. inflation eased in March. Electronics and auto stocks were leading the declines. USD/JPY was at 133.12, down from 133.80 as of Wednesday's Tokyo stock market close. Earnings remain in focus, with Fast Retailing scheduled to report its results later in the day. The Nikkei Stock Average was down 0.3% at 27990.53.

South Korea's benchmark Kospi was 0.8% lower at 2531.07 in early trade as battery and semiconductor stocks retreated. U.S. inflation remaining well above prepandemic levels despite easing in March and recession fears were weighing on sentiment. Foreign investors were net sellers with USD/KRW 0.1% higher at 1,327.00. Some investors were continuing to book profits on battery and chip stocks after recent gains.

Hong Kong's Hang Seng Index fell 1.7% to 19964.27, tracking broad losses among other Asian equities after U.S. data showed inflation still remains well above prepandemic levels. China's latest trade data would likely be in focus, UOB analysts said, adding that "imports growth will likely flip back to contraction territory (-6.4% on year) after prior month's surprise jump to 4.2%." Sunac China was leading the declines, falling 47%, after it resumes trading after a year. Alibaba Group was down 3.9% following media reports that Japanese tech giant SoftBank Group has moved to sell nearly its entire holding in the Chinese company.

Chinese shares were lower in the morning trade, tracking Wall Street losses overnight as a pullback in U.S. inflation failed to boost hopes for a Fed rate-hike pause. Telecom and insurance companies were weighing on the market. Among the gainers were energy stocks, and some consumer companies. The Shanghai Composite Index declined by 0.2% to 3321.27. The Shenzhen Composite Index dropped 0.3% and the ChiNext Price Index fell 0.5%.

FOREX 

Asian currencies consolidated versus USD in the morning session, but could weaken amid ongoing bets for Fed rate increase in May. The U.S. CPI data released Wednesday still keeps a May rate increase by the Fed in play, the APAC Strategy Team at Saxo Markets says in a research report, noting Fed fund futures imply around 70% probability of a 25bp rate increase. The FOMC meeting's minutes also support the case for another Fed rate increase in May for now, the team adds. USD/KRW edges 0.1% higher to 1,324.81 while USD/SGD is little changed at 1.3275

TD Securities added a long AUD/USD position to its model portfolio, entering at 0.6693 and targeting an upward move to 0.7000, the brokerage's strategists said. Benign U.S. inflation data has probably given some extra firepower for USD to continue to push lower, while a U.S. economic slowdown is unlikely to bring the rest of the world down in coming months, they said. Also, AUD was one of cheapest currencies on TD Securities' "Global FX Dashboard," and had a high "beta" to China, where the country's reopening theme should support the Australian currency, the strategists added. AUD/USD edged 0.1% lower to 0.6692.

METALS 

Gold edged higher in the morning Asian session. Macroeconomic conditions for gold have probably improved although future upside may already be expected, RBC Mining & Materials Equity Team said. Slowing inflation and growth during 2023 would likely enable tight monetary policy to loosen, putting downward pressure on real-interest-rate expectations and offering support to the precious metal, the team reckoned. Spot gold was 0.1% higher at $2,016.65/oz.

OIL SUMMARY 

Oil futures were a touch lower in early morning Asian session in a likely technical correction after front-month WTI crude futures settled at the highest since November and front-month Brent at the highest since January. Technical charts indicated that WTI could "dip back toward broken resistance range between $81.00/bbl to $81.80/bbl, given that it is testing its 200-day average," said Fawad Razaqzada, market analyst at City Index and forex.com. Front-month WTI and Brent were both 0.1% lower at $83.19/bbl and $87.23/bbl, respectively.

 
 
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(END) Dow Jones Newswires

April 12, 2023 23:19 ET (03:19 GMT)

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