Asian stocks trail global equities lower, US CPI in focus

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A man wearing a protective mask, amid the coronavirus disease (COVID-19) outbreak, walks past an electronic board displaying Nikkei Index charts (top) outside a brokerage in Tokyo, Japan, on March 10, 2022. REUTERS/Kim Kyung-Hoon

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BEIJING/HONG KONG, June 10 (Reuters) – Asian stocks trailed Wall Street lower on Friday as the dollar held on to overnight gains after the European Central Bank’s rate hike forecasts and the upcoming US inflation data confused investors.

MSCI’s broadest Asia Pacific ex-Japan equity index (.MIAPJ0000PUS) fell 1.2% in early Asian trade, weighed down by 1.5% declines in Hong Kong (.HSI), 0, 8% in resource-rich Australia (.AXJO) and 1.6% in South Korea (.KS11).

The Japanese Nikkei (.N225) fell 1.2%.

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Hong Kong-listed tech giants (.HSTECH) were hit hard, with their sub-index opening down 2.9%. Shares of Alibaba in Hong Kong (9988.HK) fell 3.3% after subsidiary Ant Group said it had no plans to launch an initial public offering. This was a response to media reports that Beijing had approved the relaunch of the IPO. Read more

Shares of Alibaba in the United States fell 8.1% overnight.

Market sentiment in China was soured by new restrictions in Beijing and Shanghai as new cases of COVID-19 emerged. Several districts in Beijing are closing entertainment venues, while most Shanghai citizens face new rounds of mass testing to prevent another outbreak. Read more

The European Central Bank on Thursday ended a long-running stimulus program and said it would make its first interest rate hike since 2011 next month, followed by a potentially bigger step in September. Read more

While the ECB’s decision was widely expected, the possibility of a bigger hike in September weighed on sentiment. The eurozone economy is struggling with slowing growth and runaway inflation exacerbated by a months-long war in Ukraine.

“Global equities came under pressure after the ECB issued guidance, and (ECB President Christine) Lagarde noted upside inflation risks,” ANZ analysts said in a note. Friday.

“And with energy prices continuing to climb, it’s not yet clear that inflation has peaked. The Fed’s policy guidance and actions may need to become more hawkish for longer. Financial markets are nervous.”

For months, markets have focused on how quickly central banks have acted to rein in inflation. Investors now expect the Federal Reserve to raise interest rates by 50 basis points next week, especially if consumer price data in the United States confirms high inflation on Friday.

The consensus forecast calls for a year-over-year inflation rate for May of 8.3%, unchanged from April.

Stocks on Wall Street fell as the market awaited price data. The S&P 500 (.SPX) and Nasdaq (.IXIC) fell more than 2% in their largest daily percentage declines since mid-May, with mega-cap growth stocks leading the way.

Apple Inc (AAPL.O) and Amazon.com Inc (AMZN.O) fell 3.6% and 4.2%, respectively.

While some investors were hoping inflation might have peaked, a recent rise in oil prices to a 13-week high has shaken that optimism, adding to the appeal of the safe-haven dollar.

In the currency markets, the US dollar maintained its overall strength against a basket of major currencies, hovering around its highest level in three weeks. The euro wallowed at a 2.5-week low while the yen gained 0.16% against the greenback, moving away from a 20-year low.

On Friday, moves in US Treasuries were largely muted. The yield on the benchmark 10-year Treasury note rose slightly to 3.0566% from its US close of 3.042% on Thursday.

The two-year yield, which rises on traders’ expectations of a hike in the fed funds rate, touched 2.8319%, versus a US close of 2.817%.

Oil prices fell after parts of Shanghai imposed new lockdowns. Still, strong gains in refined products supported crude prices near three-month highs.

U.S. crude futures fell 0.16% to $121.33 a barrel and Brent crude settled down 0.2% to $122.81.

Gold fell slightly on Friday and headed for a weekly fall as Treasury yields rose. Spot gold was trading at $1,846.4949 an ounce.

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Reporting by Stella Qiu and Alun John; Editing by Bradley Perrett

Our standards: The Thomson Reuters Trust Principles.

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