GLOBAL MARKETS – Asian stocks fall ahead of US CPI, crypto worries rise
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Asian stock markets: https://tmsnrt.rs/2zpUAr4
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Dollar Holds Firm, Crypto Stocks Contagious Fears
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European markets will open lower
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Mainland China, Hong Kong shares hit by the COVID case
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Focus on US inflation for signs of Fed rate hike slowdown
By Stella Qiu
SYDNEY, Nov 10 (Reuters) – Asian stock markets retreated on Thursday and the dollar held its overnight gains ahead of the big test of a U.S. consumer inflation report, while market sentiment took a nosedive as the likely collapse of a major crypto exchange spooked investors.
With no final results available from the US midterm elections, investors turned to upcoming inflation data later in the day, which is likely to show a slowdown in both the monthly and annual core figures for October to 0.5% and 6.5% respectively. , according to a Reuters survey.
European markets are set to extend the cautious sentiment, with pan-regional Euro Stoxx 50 futures down 0.7%. However, US S&P 500 futures rose 0.2% while Nasdaq futures rose 0.3%.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.2%, dragged down by a 1.0% drop in China’s blue chips and a 1.8% decline in Hong Kong’s Hang Seng index.
Japan’s Nikkei lost 1.0 percent.
China is again grappling with a wave of COVID, with the southern metropolis of Guangzhou reporting thousands of cases. Apple Inc supplier Foxconn plans to update its fourth-quarter outlook on Thursday, after strict COVID curbs remained in place at its main plant in China despite the lifting of a lockdown.
Elsewhere, the focus remained on inflation.
“The high likelihood is that we’ll see a number that’s pretty much in line with expectations – that’s obviously a tougher call and we may have to wait for guidance from Fed speakers in the session ahead to see how they interpret that,” Chris said Weston, head of research at brokerage Pepperstone.
Minneapolis Federal Reserve Bank President Neel Kashkari said Wednesday that it is “far too early” to discuss any pivot away from the Fed’s current policy tightening.
A number of Fed officials including Governor Christopher Waller, Bank of Philadelphia President Patrick Harker, Bank of Dallas President Lorie Logan will speak tonight.
The futures market currently showed investors believe the Fed could taper to a 50 basis point hike next month, while the US federal funds target could peak around 5.1% by June next year.
Overnight on Wall Street, stocks finished lower as Republican gains in the midterm elections appeared more modest than some had expected. Republicans were still favored to win control of the House of Representatives, but key races were too close to call.
In the crypto world, bitcoin rose 3.6% to $16,443 on Thursday, after falling for two straight sessions to its lowest level since late 2020.
Binance, the world’s largest crypto exchange, said late Wednesday that it had decided not to buy smaller rival FTX, which has been struggling with a severe liquidity crisis and faced bankruptcy without more capital.
“You can’t deny the growing correlation between bitcoin and risk assets. The FTX news has an outsized effect on asset prices,” said Stephen Innes, managing partner at SPI Asset Management.
“Bitcoin spillovers are not insignificant, and given how widely cryptocurrencies are held, it could mean more forced liquidation of other assets to cover margin calls as long investors were massively wrong-footed.”
The US dollar held most of the overnight gains against a basket of currencies on Thursday.
Sterling rose 0.4% against the dollar to $1.1409, after falling 1.6% in the previous session.
US Treasury yields were lower on Thursday.
The yield on the benchmark 10-year note fell 8 basis points to 4.0751%, while the yield on 2-year notes fell 3 basis points to 4.5963%.
In commodities, oil prices pared earlier losses on Thursday, after falling around 3% in the previous session on fears of demand from China and rising US crude stocks.
U.S. crude futures were flat 0.3% at $85.83 a barrel, while Brent crude futures settled at $92.71.
Gold was higher, with the spot price at $1,709.08 an ounce.
(Reporting by Stella Qiu; Editing by Bradley Perrett and Sam Holmes)
