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Friday, August 19, 2022

Fed, economic data, inflation currencies, oil

SINGAPORE — Shares in the Asia-Pacific region fell on Monday ahead of an important week in the U.S.

The Nikkei 225 in Japan slipped 0.84% and the Topix index lost 0.72%.

In South Korea, the Kospi declined fractionally, while the Kosdaq shed 0.75%.

With the focus on the US FOMC meeting, Asian assets will likely trade mixed in the early part of the week with stagflation risks staying top-of-mind.

Venkateswaran Lavanya

Economist, Mizuho Bank

Australia’s S&P/ASX 200 hovered around the flatline.

The Hang Seng index in Hong Kong fell 0.37%, and the Hang Seng Tech index lost about 1%.

Mainland China markets were also lower. The Shanghai Composite slipped 0.11%, and the Shenzhen Component shed 0.27%.

The Financial Times reported that China plans to sort U.S.-listed Chinese companies into three groups depending on the sensitivity of the data the firms hold to prevent delisting.

MSCI’s broadest index of Asia-Pacific shares outside of Japan was slightly negative.

Inflation data in Singapore is set to be released Monday. Economists polled by Reuters expect the core consumer price index for June to increase 4.2% compared to a year ago. Prices rose 3.6% in May.

Stock picks and investing trends from CNBC Pro:

Over the weekend, the World Health Organization declared monkeypox a global health emergency. The organization’s emergency committee was unable to reach a consensus, but WHO chief Tedros Adhanom Ghebreyesus made the decision to issue the highest alert, though he said it is unlikely to disrupt global trade or travel at the moment.

Later this week, all eyes will be on the Fed rate decision and the release of second quarter gross domestic product data in the U.S.

Expectations for a 75 basis point move in July stood at 78.7%, according to the CME Group’s FedWatch Tool.

“With the focus on the US FOMC meeting, Asian assets will likely trade mixed in the early part of the week with stagflation risks staying top-of-mind,” Venkateswaran Lavanya, an economist at Mizuho Bank, wrote in a note Monday.

Within the Asia-Pacific region, advance estimates for South Korea’s GDP will be out Tuesday and Australia reports inflation data Wednesday.

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 106.823.

The Japanese yen traded at 136.46 per dollar, after strengthening sharply late last week. The Australian dollar was down 0.52% at $0.6888, slightly below the $0.69 level.

Oil futures gave up earlier gains in Asia’s morning. U.S. crude slipped 0.2% to $94.51 per barrel, while Brent crude was about flat at $103.15 per barrel.

— CNBC’s Patti Domm and Spencer Kimball contributed to this report.

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