Asian stock markets exhibited weakness on Monday as investors awaited the release of U.S. inflation data for September, seeking insights into the Federal Reserve’s future actions regarding interest rates.
The broadest index of Asia-Pacific shares outside Japan, as measured by MSCI, registered a decline of 0.4%, following a session of modest gains in U.S. stocks the previous day.
Both Australian shares and Japan’s Nikkei stock index saw losses of 0.25%.
Hong Kong’s Hang Seng Index experienced a significant drop of 1.4%, primarily attributed to declines in property stocks and a 3.1% dip in e-commerce giant Alibaba Group’s (NYSE:BABA) stock following the unexpected departure of CEO Daniel Zhang from its cloud unit. Meanwhile, China’s blue-chip CSI300 Index displayed a modest increase of 0.37%.
Investors eagerly await the release of the U.S. Consumer Price Index (CPI) for August, scheduled for Wednesday. It is anticipated that inflation will rise by 0.6% month-on-month for August, potentially bringing the year-on-year rate to 3.6%, according to a research note from Wells Fargo.
Currently, market sentiment reflects a 93% probability of the Federal Reserve maintaining the current interest rates after its upcoming meeting on September 20. However, there is only a 53.5% likelihood of another rate pause at the November meeting, as per CME Group’s FedWatch Tool.
Economists at ANZ noted, “Hawkish FOMC speakers have indicated that it may be appropriate to hold in September, and we think the committee wants time to digest incoming data. The extent of monetary restraint in the economy encourages us to think that it will decelerate, not reaccelerate, from here.”
The yield on benchmark 10-year Treasury notes increased to 4.2939%, compared to its U.S. close of 4.256% on the preceding Friday. The two-year yield, which typically rises with expectations of higher Fed fund rates, reached 5.0033%, up from the U.S. close of 4.984%.
China experienced a slight relief from deflationary pressures as the Consumer Price Index (CPI) rose by 0.1% in August, compared to the previous year. While this was slightly lower than the 0.2% increase expected in a Reuters poll, it marked a significant improvement from the 0.3% decline observed in July.
China also saw its smallest decline in factory prices in five months, with the Producer Price Index falling by 3.0% year-on-year, in line with expectations, following a 4.4% drop in July.
Global energy markets are closely monitoring negotiations between Chevron Corp (NYSE:CVX) and its workers, as strikes commenced at key liquefied natural gas (LNG) facilities in Australia, which supply 5% of the world’s LNG output.
European gas prices have exhibited volatility since August, when news of potential labor unrest first surfaced. Prices surged by as much as 14% following Friday’s announcement that strikes would commence after five days of fruitless talks.
The U.S. dollar experienced a 0.41% decrease against the yen, trading at 147.21, edging closer to its yearly high of 147.87 reached on September 9.
The European single currency showed a 0.1% gain on the day, reaching $1.0709, despite a 1.22% loss over the past month. Meanwhile, the dollar index, which measures the greenback against a basket of major trading partner currencies, dipped slightly by 0.057% to 104.79.
U.S. crude oil saw a 0.59% decline, settling at $86.99 per barrel, while Brent crude slipped by 0.44% to $90.21 per barrel.
Spot gold displayed a marginal increase, trading at $1,918.3663 per ounce.
