(Bloomberg) — Asia stocks were mixed Thursday after a U.S. inflation print intensified calls for interest-rate increases as soon as March.
Shares edged up in Hong Kong even as a Chinese technology gauge fell after its biggest jump in three months. Japan declined. Chinese developers retreated as as some of the property sector’s more indebted firms face a wave of key payments this week. U.S. futures turned red after the S&P 500 and the Nasdaq 100 ended higher Wednesday.
A gauge of the dollar was steady. It had its worst session since May amid a muted reaction in Treasury yields and as much of the expectations for rate hikes have been priced in. The U.S. consumer price index climbed at the fastest pace since 1982, in line with forecasts.
Treasuries yields have surged this year on mounting wagers for at least three rate hikes from the Federal Reserve in 2022. Traders stuck to their bets for a rate hike in March after the inflation data.
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. In remarks prepared for a confirmation hearing before the Senate Banking Committee, Fed Governor Lael Brainard said tackling inflation and getting it back down to 2% while sustaining an inclusive recovery is the U.S. central bank’s most pressing task.
“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.”
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.
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 and businesses’ expectations for growth over the next several months have cooled in some places, the Fed said in its Beige Book survey.
Elsewhere, oil held an advance on signs of tighter supply. Bitcoin traded around $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 fell 0.1% as of 11:50 a.m. in Tokyo. The S&P 500 rose 0.3%
- Nasdaq 100 futures lost 0.2%. The Nasdaq 100 rose 0.4%
- Topix index fell 0.6%
- Australia’s S&P/ASX 200 Index rose 0.6%
- Kospi index fell 0.2%
- Hang Seng Index rose 0.4%
- Shanghai Composite Index fell 0.2%
- Euro Stoxx 50 futures were little changed
Currencies
- The Japanese yen was at 114.64 per dollar
- The offshore yuan traded at 6.3631 per dollar
- The Bloomberg Dollar Spot Index was little changed
- The euro was at $1.1445
Bonds
- The yield on 10-year Treasuries was at 1.75%
- Australia’s 10-year bond yield one basis point to 1.86%
Commodities
- West Texas Intermediate crude was at $82.61 a barrel
- Gold was at $1,824.88 an ounce
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