Stocks struggle for footing as US PPI data awaited: Markets wrap

Stocks in Asia struggled for direction as investors awaited readings on US inflation for clues on the Federal Reserve’s interest-rate path.

An Asia Pacific equity gauge was little changed, with gains in South Korea offset by losses in Hong Kong. In Japan, the blue-chip Nikkei-225 Stock Average Index fluctuated as traders continued to assess the likelihood of an interest rate hike by the Bank of Japan, which will be its first since 2007.

“Markets have a close eye on US producer price data later today, as it could be used to confirm or deny this week’s hotter CPI report,” said Matt Simpson, a senior market strategist at City Index. “That seems to be suppressing volatility more than usual in today’s Asian session, not helped by the lack economic data this session.”

Sentiment remained fragile in Chinese markets despite officials pledging central government funds to encourage consumers and businesses to replace old equipment and goods. Shares related to Asian copper miners advanced after the metal jumped to an 11-month high on potential capacity cuts at Chinese smelters.

Meanwhile, contracts for US equities ticked marginally higher after a listless US session on Wednesday with the S&P 500 ending lower and the tech-heavy Nasdaq 100 falling 0.8%.

US data due later in the week will offer further signs of the health of the US economy and the effect of monetary policy. The Federal Reserve’s interest rate decision is due next week.

FX lethargy

Treasuries steadied in Asia after selling off Wednesday with the 10-year yield rising four basis points. An index of the dollar was little changed after a decline in the previous session and the yen was marginally stronger at around 147 per dollar.

Markets are getting very comfortable with a soft-landing scenario lubricated by almost-synchronized global central bank easing, according to Alvin Tan, head of Asia FX strategy at RBC Capital Markets in Singapore. “At this point, it’s fair to say that nothing much is really happening in FX space, except perhaps for the yen,” he wrote in a note. “We’ll need some sort of global market shock to shake FX out of its lethargy.”

ByteDance was in focus after the US House of Representatives passed a bill to ban TikTok in the US unless its Chinese owner sells the video-sharing app.

In commodities, oil held the biggest gain in about five weeks after US crude stockpiles shrunk and Ukraine attacked another Russian refinery. Gold steadied.

Elsewhere, Nippon Steel Corp fell on a report that President Joe Biden is expected to soon release a statement of concern about the company’s proposed purchase of United States Steel Corp. US Steel dropped as much as 15%, its biggest intraday loss since June 2020.

Key events this week:

US PPI, retail sales, initial jobless claims, business inventories, Thursday
China property prices, Friday
Japan’s largest union federation announces results of annual wage negotiations, just ahead of Bank of Japan policy meeting, Friday
Bank of England issues inflation survey, Friday
US industrial production, University of Michigan consumer sentiment, Empire Manufacturing, Friday

Some of the main moves in markets: