(Bloomberg) — Asia stocks look set to open steady after a U.S. inflation print left intact expectations for interest-rate increases already priced into the market. The dollar sank.
Australia’s shares edged up at the open. Futures slipped in Japan and rose in Hong Kong. U.S. futures were little changed after commodity and retail companies led gains in the S&P 500. Tesla Inc. and Google’s parent Alphabet Inc. paced a rally in megacaps.
A gauge of the dollar had its worst session since May as the consumer price index accelerated at the fastest pace since 1982, in line with forecasts.
Treasuries were muted after yields already surged this year on mounting wagers for at least three rate hikes from the Federal Reserve in 2022, and after a weak 10-year note auction. Traders stuck to their bets for a rate hike in March.
The U.S. inflation read came after Fed Chair Jerome Powell vowed to contain the worst price pressures in four decades without derailing the economic recovery from the pandemic.
Fed St. Louis President James Bullard told the Wall Street Journal that four rate increases may be warranted this year amid high inflation. Separately, Fed Bank of Cleveland President Loretta Mester and Atlanta Fed leader Raphael Bostic backed hiking rates as soon as March.
“Inflation is going to be with us no matter if they increase rates and the challenges of the economy here are just going to build on that,” Shana Sissel, Strategic Wealth Partners chief market strategist, said on Bloomberg Television. “I am concerned that there is going to be quite a bit of volatility in the market and our economy is going to slow down considerably.”
Read: Fed Chorus for March Hike Grows as Mester, Bostic Add Support
The U.S. economy grew at a modest pace in the final weeks of last year, but businesses’ expectations for growth over the next several months have cooled in some places, the Fed said in its Beige Book survey.
Elsewhere, oil climbed on signs of tighter supply. Bitcoin advanced near $44,000 as the inflation numbers rekindled the debate about whether the cryptocurrency is a hedge against rising consumer prices.
Here are some key events this week:
- U.S. initial jobless claims, PPI on Thursday.
- U.S. Senate Banking Committee hearing for Lael Brainard, nominated as Fed vice-chair, on Thursday.
- Richmond Fed President Thomas Barkin, Philadelphia Fed President Patrick Harker, Chicago Fed President Charles Evans speak on Thursday.
- Bank of Korea policy decision and briefing on Friday.
- Wells Fargo, Citigroup, JPMorgan due to report earnings on Friday.
- U.S. business inventories, industrial production, University of Michigan consumer sentiment, retail sales on Friday.
- New York Fed President John Williams speaks Friday.
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 8:05 a.m. in Tokyo. The S&P 500 rose 0.3%
- Nasdaq 100 futures were little changed. The Nasdaq 100 rose 0.4%
- Nikkei 225 futures fell 0.1%
- Australia’s S&P/ASX 200 Index rose 0.2%
- Hang Seng Index futures rose 0.7% earlier
Currencies
- The Japanese yen rose 0.6% to 114.63 per dollar
- The offshore yuan rose 0.2% to 6.3588 per dollar
- The Bloomberg Dollar Spot Index fell 0.6%
- The euro rose 0.7% to $1.1443
Bonds
- The yield on 10-year Treasuries was at 1.74%
- Australia’s 10-year bond yield rose two basis points to 1.87%
Commodities
- West Texas Intermediate crude rose 0.2% to $82.84 a barrel
- Gold was at $1,826 an ounce
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