Asian stocks slide ahead of key US inflation data

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HONG KONG: Asian stocks slipped and the dollar held steady on Friday as traders moved away from riskier assets amid renewed concerns over Covid-19 and ahead of key US inflation data that could drive rates from the Federal Reserve.
The MSCI’s largest Asia-Pacific stock index outside of Japan fell 0.4% and Japan’s Nikkei fell 0.5%.
Overnight, the S&P 500 lost 0.72% and the Nasdaq Composite lost 1.71%. Futures on the S&P 500 rose 0.14% in Asian hours.
Risk-friendly stocks and currencies had performed well earlier in the week, with MSCI’s regional benchmark posting its best day in two months on Tuesday, helped by indications that the Omicron strain of the novel coronavirus may not be so economically disruptive as initially feared.
“Then, as we come towards the end of the week, the fact that Europe was heading much more clearly towards some kind of lockdown light and cases are increasing, and the number of COVID-19 cases in the United States is starting to increase… a little bit, ”said Rob Carnell, Asia-Pacific research manager at ING.
“There’s also a slight sense of ‘let’s not have too much risk on the table for the weekend.’ Of course there’s the CPI in the US – but I think we’ve all realized that. the fact that there is inflation in the United States now, ”he added.
The U.S. Consumer Price Index (CPI) for November is due later on Friday and a Reuters poll of economists expects it to have risen 6.8% year-on-year, beating an increase of 6.2% in October, which was the fastest gain in 31 years.
Any surprise on the upside will likely be interpreted as an argument for a faster Fed slowdown and faster interest rate hikes.
China Evergrande Group shares lost 1.5% after Fitch demoted it to restricted default status.
Hong Kong’s benchmark fell 0.24%, but global markets have been far less concerned with the latest developments in the long Evergrande saga than they were a few months ago.
“This problem has been going on for two and a half months now, and the markets don’t appear to be as turbulent as a default on Evergrande’s offshore debt seemed very likely,” said Shane Oliver, head of investment strategy at AMP Capital. .
Also in China, the central bank on Thursday ordered financial institutions to keep more foreign currency in reserve for the second time this year, which markets interpreted as an attempt to slow a recent rapid appreciation of the yuan.
The yuan lost about half a percent in offshore trading on Thursday and weakened further on Friday to 6.385.
Other currency movements were in line with the general mood at risk. The dollar held on, the euro, which lost 0.4% overnight, remained under pressure, while the Australian dollar faltered lower.
US Treasury yields slipped slightly overnight, with benchmark 10-year T-bills remaining at 1.4888%.
Oil has also slipped. US crude fell 0.5% to $ 70.56 a barrel. Brent crude fell 0.47% to $ 74.08, while gold, however, edged up amid concerns. The spot price rose 0.2% to $ 1,777.8 per ounce.


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