Asia-Pacific Shares Take A Dive Ahead Of U.S Inflation Data

11/01/2022 Asian stocks and U.S. futures dipped on Tuesday ahead of a key U.S. inflation that’s expected to strengthen the case for tighter monetary policy. U.S. December consumer inflation data is due to be released on Wednesday, with headline CPI seen coming in at a red-hot 7.1% on a year-on-year basis, boosting the case for interest rates to rise sooner rather than later. Federal Reserve Chair Jerome Powell appears before the Senate Banking Committee on Tuesday for consideration to a second four-year term as head of the Fed, followed by a hearing with vice chair nominee Lael Brainard on Thursday. Shares slipped in Japan, China and Australia edged up in Hong Kong. Tencent 1.68% firmer. MSCI’s broadest index of Asia-Pacific ex. Japan notched up 0.10%.

Bitcoin recovered to around $42,000 after dipping below $40,000. Oil edged up on Tuesday, after two days of losses. Brent crude futures gained 44 cents, or 0.54%, to $81.31 a barrel. U.S. WTI crude futures rose 56 cents, or 0.68%, to $78.76 a barrel. Gold up, for a third day, as market participants assessed comments by the Federal Reserve Chair that the central bank will prevent inflation from getting entrenched amid rising expectations for an interest rate hike in March.

Here are some key events this week:
• Fed Chair Jerome Powell’s confirmation hearing in the Senate Banking Committee on Tuesday.
• EIA crude oil inventory report on Wednesday.
• China PPI, CPI on Wednesday.
• U.S. CPI, Fed Beige Book on Wednesday.
• U.S. initial jobless claims, PPI on Thursday.
• 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.

Locally, the JSE slipped 0.15% and the Top- 40 down 0.20% as global counterparts continue to digest the prospects of higher interest rates in 2022. Precious metals gained 1.01%, financials 0.92%, banks 0.76% and resources 0.4%. Retailers lost 1.05% and industrials 0.97%. The rand steady at R15.67/$, Yield on 10-year govt rand bonds rose 10.50 bps to 9.98 %. Top-40 futures +296 points up, pointing to a firm start to the day at the opening bell.

UK/EU/US
European shares posted their biggest one-day drop since late November on Monday as rising bond yields weighed on the heavyweight technology sector. The pan-European STOXX 600 closed 1.5% lower, with technology stocks tumbling 3.6% to a near three-month low. Losses were spread out across most European sectors. Meanwhile, investors have ramped up expectations that the Bank of England will raise interest rates as early as next month after a surprise hike in December. FTSE100 futures firm +23 points, Dax futures +92 points.

Wall Street closed mixed on Tuesday. Dow gave up 0.45%, S&P500 slipped 0.14%, while technology stocks led the falls early in the day but recovered to leave the Nasdaq up 0.05%. The dollar index on Tuesday hovered around 95.912. It hit a more than 16-month high of 96.938 on Nov. 24 amid increasing hawkishness from Fed policymakers, but has since been stuck between that level and 95.544, touched less than a week later. Stocks futures open flat after choppy trading session on Tuesday: Dow futures -0.04%, S&P500 futures -0.02%, Nasdaq futures -0.08%

ASIA
Australian shares closed nearly 1% lower on Tuesday, led by financials, as an Omicron-led surge in COVID-19 infections in the country hovered near record levels, sending major retailers lower.
The S&P/ASX 200 index ended 0.77%. Japan’s coincident indicator index rose in November for a second month, the government said on Tuesday, as nationwide COVID-19 infections stayed low through the month.
The index, which consists of a variety of data such as factory output, employment and retail sales, gained a preliminary 3.8 points over the previous month to stand at 93.6 in November, the cabinet office said.