Asian shares flat as investors await US inflation data

by Jonathan Adams
US inflation data

MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.1per cent to 695.2 points, Nikkei gained slightly to 28,905.5, while Chinese blue-chip index was off 0.3per cent

Shares in Asia were flat on Thursday, with China nudging lower, while the US dollar held below an 11-week high as investors digested US Fed statements on inflation and looked to upcoming data.

MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.1per cent to 695.2 points, rising from a one-month low of 685.12 reached earlier this week.

Japan’s Nikkei gained slightly to 28,905.5, while Chinese shares were in the red with the blue-chip CSI300 index off 0.3per cent.

On Wall Street, the Nasdaq finished at a record high on Wednesday, while other major US indexes finished the day lower alongside European stocks.

The market has whipsawed over the last week, following a surprise projection for rate hikes by 2023 by the US Federal Reserve which knocked stocks, boosted the dollar and flattened the US bond yield curve.

Investors are now pricing the first full US interest rate rise for February 2023 compared to December 2022 in the immediate aftermath of the Fed meeting.

Overnight, 10-year Treasury yields stayed below 1.5per cent in muted trading.

Until bond yields break out in a sustainable fashion, in either direction, it remains very hard to determine which direction stocks are headed in over the near term, JP Morgan analysts wrote in a note. Much continues to hinge on the upcoming growth data.

While data on Wednesday showed strong manufacturing activity in Europe, ISM manufacturing data and US non-farm payrolls are due next week.

The US dollar fluctuated below an 11-week high compared to major peers as traders assessed conflicting signals from the Fed on the timing of a withdrawal of monetary stimulus.

On Wednesday, two Fed officials said a period of high inflation in the United States could last longer than anticipated, just a day after Fed Chair Jerome Powell played down rising price pressures.

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