Asian equities fall as traders focus on US inflation data and the Fed's decision

Tuesday’s Asian markets saw significant losses as investors watched the Federal Reserve’s policy announcement and US inflation data, while the euro failed to rebound from a sell-off sparked by political unrest throughout Europe.

On Monday, all three of Wall Street’s primary indexes increased, with the Nasdaq and S&P 500 setting new records.

On Tuesday, however, Asian investors lost confidence following a lackluster showing in trading on the day before due to the holiday.

After a long weekend holiday, Hong Kong, Shanghai, Sydney, Singapore, Taipei, Manila, and Jakarta were all down.

But Mumbai, Bangkok, Seoul, Tokyo, and Seoul all gained ground.

Fresh appeals from Chinese officials to work toward reducing the nation’s housing stocks did not seem to sway traders, who are already struggling to maintain the heavily leveraged real estate sector.

According to Bloomberg News, a Hong Kong court on Tuesday ordered the liquidation of Chinese developer Dexin, making it the latest company to receive such an order.

Following the announcement of a sudden legislative election by French President Emmanuel Macron in response to the country’s far-right party’s good performance in EU elections, the euro continued to under pressure from its peers due to escalating political uncertainty.

The far-right in Austria, the Netherlands, Germany,
Spain, and Italy was also doing well in the survey, dealing a devastating blow to centrists.

London was up, and the stock markets in Paris and Frankfurt rebounded after falling on Monday.

Following Monday’s surge, oil fell as traders awaited the publication of an OPEC report detailing its demand projections.

The gains came after the commodity had recently dropped sharply due to a declaration by OPEC and other producers that they would begin rolling back their previous reductions.

Due to the losses, grouping officials reassured markets that the company would still make a change of heart if necessary.

Following a positive run last week fueled by indications of a slowdown in the labor market and economy, Friday’s non-farm jobs report, which outperformed expectations, delivered a dose of reality: interest rates may remain high for some time.

There has been much conjecture over the number of rate cuts the Fed may implement this year. A number of policymakers have shown reluctance to act prematurely due to concerns about reinforcing inflation, which is still persistently higher than target.

The next policy meeting ends on Wednesday, and the focus now shifts to the release of May’s consumer price index, which fell in April following three consecutive above-estimate readings.

The primary focus of decision-makers is their so-called “dot plot” prediction for rates over the upcoming months, even though it is anticipated that borrowing prices will be postponed.

Traders’ initial predictions for the year were as high as six cuts, but since then, they have trimmed them down to the most optimistic three cuts, with some even aiming for zero.

“While April inflation came in softer-than-expected, paving the way for rate cuts once again after the initial pushback, we have argued that one month of data does not constitute a trend,” said Saxo’s Charu Chanana.

“This puts the May inflation print heavily under the radar, to confirm that disinflation is progressing and to give confidence to the Fed to cut rates this year.”

– Key figures –

Tokyo – Nikkei 225: Up 0.3 per cent at 39,134.79 (close)
Hong Kong – Hang Seng Index: Down 1.0 per cent at 18,176.34 (close)
Shanghai – Composite: Down 0.8 per cent at 3,028.05 (close)
London – FTSE 100: Up 0.2 per cent at 8,243.36
Euro/dollar: Down at $1.0766 from $1.0767 on Monday
Euro/pound: Up at 84.65 pence from 84.54 pence
Dollar/yen: Up at 157.34 yen from 157.04 yen

Pound/dollar: Down at $1.2718 from $1.2732
West Texas Intermediate: Down 0.1 per cent at $77.69 per barrel
Brent North Sea Crude: Down 0.1 per cent at $81.56 per barrel
New York – Dow Jones: UP 0.2 per cent at 38,868.04 (close)
AFP