Growth, inflation fears keep bears hopeful ahead of ECB, US CPI

  • Asia-Pacific markets remain depressed as Treasury bond yields remain firm despite the market’s pre-ECB anxiety.
  • Floods China’s Hunan dim importance of upbeat trade data.
  • Fears of higher inflation, recession due to aggressive central bank actions also weigh on sentiment.
  • ECB is ready to end bond purchases, details for July rate-hike, economic forecasts eyed for clear directions.

Markets in the Asia-Pacific region track Wall Street’s losses, as well as bear the burden of firmer yields, during early Wednesday. The government bond coupons rallied amid a rush to risk safety due to fears concerning inflation and global economic growth.

On Wednesday, White House spokeswoman Karine Jean-Pierre said they expect the inflation numbers to be released at the end of the week to be elevated. Additionally, the Organization for Economic Co-operation and Development (OECD) cuts the global growth outlook for 2022 while World Bank (WB) President David Malpass warned that faster-than-expected tightening could recall a debt crisis similar to the one seen in the 1980s.

Amid these plays, MSCI’s index of Asia-Pacific shares outside Japan drops 0.30% while Japan’s Nikkei 225 struggles to justify the Bank of Japan’s (BOJ) refrain from policy tightening, up 0.30% near 28,320 by the press time.

It’s worth noting that fears of grain shortage due to floods in China’s Hunan province supersede the benefits of upbeat trade data for May from the dragon nation. That said, China’s Trade Balance came in at +78.76B versus +58B expected and +51.12B previous. With this, stocks in China grind lower while Hang Seng prints mild losses at the latest.

Stocks in Australia and New Zealand are both down near 1.0% whereas South Korea and India portrayed around 0.30% intraday losses by the press time. Alternatively, Indonesia’s IDX Composite rises 0.76% to 7,248 at the latest as the equity traders in Jakarta cheer the government’s export promotions schemes.

On a broader front, US 10-year Treasury yields seesaw around 3.05% after rising over five basis points (bps) to 3.04% the previous day. Also, S&P 500 Futures print mild losses near 4,110 after snapping a two-day rebound on Wednesday.

Looking forward, ECB’s verdict and President Christine Lagarde’s speech will be crucial to watch for intraday directions. Following that, inflation data from China and the US could direct the market moves.

Also read: S&P 500 Futures, US Treasury bond yields remain pressured ahead of ECB, US inflation

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