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Asian shares fell and the dollar steadied on Wednesday as investors waited for a key U.S. report on inflation to provide hints to the Federal Reserve`s plans for future monetary tightening. The Consumer Price Index (CPI) report will be released later today, with markets watching for signs that inflation eased in July despite last week`s unexpectedly strong U.S. jobs numbers.
MSCI`s broadest index of Asia-Pacific shares outside Japan fell 0.51%, while Japan`s Nikkei extended losses from the previous day and was down 0.65%.
South Korea`s KOSPI lost 0.64%, Australia`s AXJO dropped 0.12%, and Taiwan`s TAIEX fell 0.70%.
“I don’t think that we are through the bear market woods yet – recession risks loom and I don’t think the Fed is done with its aggressive belt tightening,” said David Chao, a global market strategist for Asia Pacific ex-Japan at Invesco.
“I don’t think markets have fully discounted these variables. This week’s inflation data will certainly give us more clarity of the Fed’s near-term policy outlook.”
The slips in Asian markets tracked Wall Street, which closed on Tuesday with all three major indices down.
The S&P 500 fell 0.42%, the Dow Jones Industrial Average dropped 0.18%, and the Nasdaq Composite lost 1.19%.
The dollar reversed losses overnight and was trading flat in Asia. The dollar index, which measures the safe-haven greenback against six major peers, was down 0.009% at $106.330.
“A strong CPI print this week could mean the Fed is back to its aggressive rate hiking path, which would re-strengthen the USD,” said Chao.
Oil prices fell slightly after an overnight surge petered out. Brent crude futures were down 15 cents to $96.16 a barrel, while U.S. West Texas Intermediate (WTI) crude was down 22 cents to $90.28.
Gold also pared gains and was down 0.09% at $1,792.54 an ounce. It briefly broke through the $1,800 barrier overnight for the first time in more than a month.
Cryptocurrency Bitcoin, which often tracks tech stocks, was down 1.08% at $22,891.48.
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