Asian shares slide ahead of key US inflation data

FILE PHOTO: People wearing protective masks, amid the coronavirus disease (COVID-19) outbreak, are reflected on an electronic board showing Japanese stock prices outside a brokerage in Tokyo, Japan, October 5, 2021. REUTERS / Kim Kyung-Hoon

December 10, 2021

By Alun John

HONG KONG (Reuters) – Asian shares slide and the dollar holds firm on Friday as traders steer clear of riskier assets amid renewed concerns over COVID-19 and ahead of inflation data important US key can guide the Federal Reserve rate.

MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.4% and Japan’s Nikkei fell 0.5%.

Overnight, the S&P 500 lost 0.72% and the Nasdaq Composite dropped 1.71%. S&P 500 futures were up 0.14% Asian time.[.N]

Risk-friendly stocks and currencies performed well at the start of the week, with MSCI’s regional benchmark posting its best day in two months on Tuesday, supported by signs that suggest the coronavirus Omicron line may not cause economic disruption as initially feared.

“Then as we go into the weekend, the reality is that Europe is much more clearly moving into a kind of lockdown and cases are increasing, and the number of COVID-19 cases in the US is starting to flip. everything. a bit,” said Rob Carnell, head of Asia Pacific research at ING.

“Also, there’s a bit of a ‘let’s not take too much risk over the weekend’ feeling. Of course, there’s CPI in the US – but I think we’ve all woken up to the fact that there’s inflation in the US right now,” he added.

The US Consumer Price Index (CPI) for November comes into effect later on Friday, and a Reuters poll of economists predicts it will rise 6.8% year-on-year. last year, surpassing the 6.2% increase in October, the fastest increase in 31 years.

Any upside surprise will likely be interpreted as a case of the Fed adjusting faster and interest rates rising sooner.

Shares of China Evergrande Group lost 1.5% after Fitch downgraded it to limited default status.

The Hong Kong benchmark has lost 0.24% but global markets have been far less alarmed by the latest development in the Evergrande saga from a few months ago.

“This has been going on for two-and-a-half months now and the market doesn’t seem to be as active anymore because of the possibility of an external debt on Evergrande,” said Shane Oliver, head of investment strategy at AMP Capital. is very high”.

Also in China, the central bank on Thursday directed financial institutions to hold more foreign exchange reserves for the second time this year, in what markets see as an attempt to slow a rapid price rise. recent rapidity of the renminbi.

The yuan lost about half a percent in offshore trading on Thursday and weakened further on Friday to 6,385.

Other currency moves are in line with the broad risk-off mood. The dollar held firm, the euro, down 0.4% overnight remained under pressure, while the Australian dollar wobbled lower.

Yields on US Treasuries fell slightly overnight with the benchmark 10-year Treasury note at 1.4888%.

Oil also slips. US crude fell 0.5% to $70.56 a barrel. Brent crude fell 0.47% to $74.08, while gold edged higher on concerns. Spot prices rose 0.2 percent to $1777.8 an ounce.[GOL/][O/R]

(Edited by Sam Holmes)