Asian shares experienced a decline on Friday, marking their largest one-day percentage drop in a week. This came after stronger-than-expected U.S. consumer prices figures were released, which further supported the case for the Federal Reserve to maintain higher interest rates for a longer period. MSCI’s Asia-Pacific index fell 1.2%, although it is still on track for a 1.4% gain for the week. European markets were also expected to start on a negative note. The focus later in the day will shift to inflation reports from Sweden, Spain, and France. In the U.S., the recent increase in consumer prices has raised the chance of another interest rate hike by the Fed this year. This news, along with data showing an increase in the number of Americans receiving benefits after an initial week of aid, has resulted in higher Treasury yields. The sentiment in the market remains cautious due to escalating tensions in the Middle East. Traders are now eagerly awaiting remarks from Federal Reserve Chair Jerome Powell, who is scheduled to speak on October 19, followed by the Fed’s next interest-rate decision at the end of the month. The risk-off sentiment has also affected currency markets, with the dollar gaining against a basket of currencies. Meanwhile, gold prices have ticked up, although they remain below the two-week highs reached in the previous session. Oil prices have risen after the U.S. tightened sanctions against Russian crude exports, creating supply concerns in an already tight market.
In conclusion, Asian shares fell as stronger-than-expected U.S. consumer prices data raised expectations for the Federal Reserve to maintain higher interest rates for a longer duration. This led to a decline in MSCI’s Asia-Pacific index, although it is still set for a gain for the week. European markets were also expected to open lower. Inflation reports from several countries were awaited, and the recent data indicated a 40% chance of a rate hike by the Fed in December. The market sentiment remained cautious due to escalating tensions in the Middle East. Investors are now eagerly awaiting remarks from Federal Reserve Chair Jerome Powell and the Fed’s next interest-rate decision at the end of the month. Currency markets saw the dollar gaining against a basket of currencies, gold prices ticked up, and oil prices rose as the U.S. tightened sanctions against Russian crude exports.
Asian shares slid on Friday following stronger-than-expected U.S. consumer prices figures, indicating a potential extended period of higher interest rates by the Federal Reserve. This decline put an end to a three-week gain for MSCI’s Asia-Pacific index, although it was still on track for a 1.4% gain for the week. European markets were also expected to start lower. Reports on inflation from Sweden, Spain, and France were highly anticipated later in the day. The rise in U.S. consumer prices in September contained an unexpected surge in rental costs, leading traders to believe that the Fed may deliver another interest rate hike this year. This news, coupled with an increase in the number of Americans receiving benefits after an initial week of aid, which serves as a proxy for hiring, solidified the case for those calling for another rate hike. The rise in Treasury yields from the inflation report and poor demand for U.S. 30-year bonds were witnessed on Thursday. The sentiment in the market remained cautious due to escalating tensions in the Middle East. The upcoming remarks by Federal Reserve Chair Jerome Powell and the Fed’s next interest-rate decision at the end of the month are eagerly awaited. The currency market saw the dollar gaining against a basket of currencies, while gold prices edged up but remained below recent highs. Oil prices rose on fears that U.S. sanctions on Russian crude exports could disrupt an already tight market.
The decline in Asian shares continued on Friday as stronger-than-expected U.S. consumer prices figures raised the possibility of the Federal Reserve maintaining higher interest rates for a longer period. MSCI’s Asia-Pacific index recorded its largest one-day percentage drop in a week, although it is still poised for a weekly gain of 1.4%. European markets were also slated for a lower opening. The market’s focus later in the day turned to the inflation reports from several countries. The rise in U.S. consumer prices for September featured an unexpected surge in rental costs, leading traders to believe that the Fed may deliver another interest rate hike. Separately, the number of Americans receiving benefits after an initial week of aid increased, a reflection of softening in the labor market. These factors strengthen the case for another rate hike. The rise in Treasury yields and weak demand for U.S. 30-year bonds were also observed. In Asia, China’s consumer prices remained flat, while factory-gate prices shrank at a slower pace, indicating the persistence of deflationary pressures. However, China’s imports and exports contracted at a slower pace, suggesting a gradual stabilization in the world’s second-largest economy. Additionally, tensions in the Middle East added to the cautious market sentiment. Investors are now awaiting remarks by Federal Reserve Chair Jerome Powell and the Fed’s next interest-rate decision. In the currency market, the dollar gained against a basket of currencies, gold prices ticked up, and oil prices rose due to increased sanctions on Russian crude exports.
