Asian shares join global rally on softer-than-expected US inflation

BEIJING/HONG KONG, Aug 11 (Reuters) – Asian shares tracked Wall Street higher on Thursday after a softer-than-expected US inflation report encouraged bets of less aggressive rate hikes from the Federal Reserve, while the dollar remained bruised after its biggest plunge in five months.

US consumer prices were unchanged in July compared with June, when they rose a monthly 1.3%. The July result was lower than expectations due to a sharp drop in the cost of petrol, causing markets to reposition on hopes that inflation was peaking.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.0% in early Asia trade, driven by a 1.2% jump in resources-heavy Australia, a 1.4% gain in South Korea .KS11 and a 1.2% advance in Hong Kong.

Gains in Chinese shares were more subdued. Blue chips .CSI300 rose 0.5% as new COVID-19 lockdowns in more Chinese cities, including the eastern export hub of Yiwu, dented sentiment.

Both the S&P 500 futures and Nasdaq futures rose more than 0.3% on Wednesday. The S&P 500 rose more than 2% during the previous session while the Nasdaq Composite closed 20% above its recent closing low in June.

“Rising real yields, due to the Fed’s commitment to fighting inflation, have been an enormous problem for valuations in 2022, so any dovishness is seen as positive by the stock market, particularly for the highest valued companies,” said Oliver Blackbourn, multi-asset portfolio manager at Janus Henderson Investors.

“However, the potentially more dovish outlook undermined a key support for the US dollar.”

US Treasuries, which had pulled back from an earlier plunge in yields as traders reassessed the Fed’s rate path, were not trading in early Asia on Thursday due to a holiday in Japan.

Slowing US inflation may have opened the door for the Federal Reserve to temper the pace of coming interest rate hikes. Traders now price in a 50 basis point rate hike next month, compared with the 75 basis point increase that had been expected before the inflation report.

“For the FOMC, the July inflation report is a pleasing first step towards being able to claim victory over inflation. However, at least one or two more similar readings for inflation are necessary if they are to have confidence that the inflation emergency has passed,” said Elliot Clarke, senior economist at Westpac.

Indeed, policymakers left no doubt they would continue to tighten monetary policy until price pressures were fully broken.]

During Wednesday’s session, Chicago Fed President Charles Evans said core inflation was still “unacceptably” high, and that the Fed would need to continue to raise rates.

Minneapolis Federal Reserve Bank President Neel Kashkari said that while the inflation reading was “welcome” the Fed was “far, far away from declaring victory” and needed to raise rates much higher.

On Thursday, the dollar was little changed against its major peers after plunging 1% in the previous session, the most in five months. Commodity currencies rallied on improved risk appetite from hopes of a soft landing.

Oil prices fell in early Asian trade as traders shifted attention back to more supply of crude entering the market coupled with weaker demand. Brent crude futures fell 0.4% to USD 97.05 a barrel, while US West Texas Intermediate crude futures fell by a similar margin to USD 91.58.

Gold was slightly lower. Spot gold was traded at USD 1,790 per ounce, pulling away from a one-month high hit in the previous session.

(Reporting by Stella Qiu and Alun John; Editing by Bradley Perrett)

Dollar drops on cooler-than-expected US inflation data

NEW YORK, Aug 10 (Reuters) – The dollar fell broadly on Wednesday following a cooler-than-expected US inflation report for July that raised expectations of a less aggressive interest rate hike cycle than previously anticipated from the Federal Reserve.

US consumer prices were unchanged on a monthly basis in July as the cost of gasoline plunged, delivering the first notable sign of relief for Americans who have watched inflation climb over the past two years.

Economists polled by Reuters had forecast a 0.2% rise in the monthly Consumer Price Index (CPI) on the heels of a roughly 20% drop in the cost of gasoline.

The dollar index USD=, which measures the currency’s value against a basket of currencies, was down 1.025% at 105.26 at 3:15 p.m. EDT (1915 GMT).

“This is good news for FX traders, as it was a pretty clear reaction and you will probably see that there still should be some follow-through,” said Edward Moya, senior market analyst at OANDA.

The dollar was down 1.58% at 132.97 yen, with the greenback briefly down as much as 2.3% against the Japanese currency, its biggest decline since March 2020.

“In a backdrop where the market is becoming more content with FF (Fed funds) pricing, the yen’s worst days appear to be over,” analysts from TD Securities said in a client note. “A broad 130-135 range may be the new normal.”

The Fed has indicated that several monthly declines in CPI growth will be needed before it lets up on the aggressive monetary policy tightening it has delivered to tame inflation currently running at four-decade highs.

Still, traders of futures tied to the US central bank’s benchmark overnight interest rate responded to Wednesday’s inflation data by slashing bets that the Fed would enact a third straight 75-basis-point hike in September, and instead would opt for a half-percentage-point increase.

“What you are seeing is the market enjoying the possibility of the Fed moving toward a less hawkish, not dovish, but slightly less hawkish stance,” said Quincy Krosby, chief global strategist at LPL Financial.

The euro EUR=EBS climbed 0.83% to USD 1.0297, while sterling gained 1.16% to USD 1.22145, with both currencies on track for their best single-day performances since mid-June.

Minneapolis Fed President Neel Kashkari said that while the cooling in price pressures in July was “welcome,” the Fed is “far, far away from declaring victory” and needs to raise the policy rate much higher than its current 2.25%-2.50% range.

Chicago Fed President Charles Evans said inflation is still “unacceptably” high, and the Fed will likely need to lift its policy rate to 3.25%-3.50% this year and to 3.75%-4.00% by the end of next year.

The Australian dollar, seen as a barometer of risk, was up 1.74% at USD 0.7083.

Bitcoin, rattled by a drumbeat of cryptocurrency fund wipeouts and thefts over recent months, was up 2.1% at USD 23,651.

(Reporting by John McCrank in New York; Editing by John Stonestreet, Mark Potter and Paul Simao)

Gold ticks lower after Fed officials call for more rate hikes

Aug 10 (Reuters) – Gold reversed course to trade lower on Wednesday as hawkish remarks from US Federal Reserve officials dampened hopes of a let-up in aggressive policy tightening after tame inflation data.

Spot gold was down 0.3% to USD 1,788.39 per ounce by 3:34 p.m. ET (1934 GMT). It had risen to its highest since July 5 after the consumer price index (CPI) data.

US gold futures settled up nearly 0.1% at USD 1,813.7.

Data showed US consumer prices did not rise in July due to a drop in gasoline costs, the first notable sign of a pause in inflation that has climbed over the past two years.

“Gold initially had a knee-jerk reaction after tamer inflation data as investors expected a less aggressive Fed. But, then they realised the data is tamer not tame,” said Jim Wyckoff, senior analyst at Kitco Metals.

The metal, which tends to do well in a low-interest rate environment, came under pressure after Minneapolis Fed President Neel Kashkari and Chicago Fed President Charles Evans reaffirmed an aggressive path for interest rate hikes.

Kashkari said the US central bank will need to raise its policy rate to 3.9% by year-end and to 4.4% by the end of 2023 to tame inflation.

Meanwhile, Goldman Sachs cut its price forecasts for the metal, saying that “structurally, gold is likely to remain range-bound as growth and tightening factors continue to offset each other.”

Spot silver rose 0.2% to USD 20.53 per ounce, platinum was up 0.7% to USD 939.97 while palladium XPD= jumped 1.5% to USD 2,249.14.

(Reporting by Ashitha Shivaprasad and Seher Dareen in Bengaluru; Editing by Shinjini Ganguli and Aditya Soni)

Philippines president denies approving plan to import 300,000 tons of sugar

MANILA, Aug 10 (Reuters) – Philippine President Ferdinand Marcos Jr. has rejected a proposal to import up to 300,000 tons of sugar and denies authorizing it, his press secretary said on Wednesday, despite an earlier announcement of approval by the industry regulator.

“He (Marcos) is the chairman of the Sugar Regulatory Board and denied this in no uncertain terms,” Trixie Cruz-Angeles said in a statement, after the regulator issued a notice of approval of the purchase plan.

The notice was posted on the Sugar Regulatory Administration’s (SRA) website on Wednesday afternoon but was later taken down.

It was signed by members of agency’s board and included a signature in blue ink above the president’s name, which Cruz-Angeles said was not that of Marcos.

The agency’s administrator Hermenegildo Serafica could not immediately be reached for comment. Serafica’s aide said she was awaiting instructions from her boss.

The plan that was initially announced was to purchase both raw and refined sugar, with the SRA notice saying cargoes must arrive no later than Nov. 30.

Raw sugar output in the crop year ending Aug. 31 is expected at 1.8 million tons, 16% lower than the production from the previous season, resulting in a substantial inventory decline, the SRA said.

Retail sugar prices have climbed due to limited local supply, adding pressure on inflation that soared to a near four-year high in July, dampening consumer spending in the second quarter.

In June the SRA said the supply situation had worsened, citing crop damage from a typhoon back in December, unfavorable weather and legal issues that had hampered previously-approved sugar importation.

The Philippines is not a regular sugar importer, but when necessary it usually buys from Thailand, the world’s second-largest exporter after Brazil.

Marcos, who has appointed himself agriculture minister, has vowed to turn the long-neglected agriculture sector into a growth engine.

But he faces enormous challenges such as declining local productivity and rising costs of farm inputs, including fertilizer, supplies of which have been disrupted by the Russia-Ukraine war.

(Reporting by Enrico Dela Cruz; Editing by Martin Petty)

European shares bounce after US inflation data calms nerves

Aug 10 (Reuters) – European shares rose on Wednesday in a sharp reversal from earlier in the session with data showing a slower-than-expected rise in US inflation last month providing some relief to investors.

The pan-European STOXX 600 index jumped 0.9%, closing its best session in nearly two weeks.

US consumer prices were unchanged in July due to a sharp drop in the cost of gasoline.

“If the US consumer is feeling more optimistic and has more money in their pocket because inflation back home is not as tricky, then potentially they will be able to spend more across Europe and in the UK and also on those multinational companies that export so much to the US,” said Danni Hewson, Financial Analyst at AJ Bell.

But analysts also noted that even as lower energy prices helped cool inflation in the United States, supply and demand risks painted a dour picture for Europe.

Heat waves and scant rainfall this summer have drained water levels on the Rhine, Germany’s commercial artery, disrupting shipping and pushing freight costs up more than five-fold.

“Unfortunately, the difficulties of sourcing energy from non-Russian sources does mean we could see European gas prices head higher as demand ramps up later into the year,” said Joshua Mahony, senior market analyst at online trading platform IG.

Rate-sensitive tech stocks .SX8P, which were among early decliners, ended 2.4% higher. Other major gainers included miners, retailers .SXRP and travel & leisure.

The STOXX 600 has struggled this month on worries over gloomy economic data, rising geopolitical tensions and fears that higher interest rates could tip the economy into a recession.

Euro zone money markets now fully price in a half-point interest rate hike by the European Central Bank in September.

Wind turbine maker Vestas (VWS) jumped 8.8%, making it the best performer on the STOXX 600 after it said it would sell its converters and control panels business to KK Wind Solutions.

Ahold Delhaize AD.AS gained 7.6% after the Dutch supermarket giant said it was postponing plans for an initial public offering of its non-food retailer, Bol.com, because of unfavourable market conditions.

(Reporting by Shreyashi Sanyal and Johann M. Cherian in Bengaluru; Editing by Sriraj Kalluvila, Kirsten Donovan)

Shares slip, dollar steady as investors await inflation data

TOKYO/LONDON, Aug 10 (Reuters) – Stocks trembled on Wednesday while major currencies held steady as investors were reluctant to place bets ahead of the release of US inflation data that could point to the Federal Reserve’s appetite for more aggressive rate increases.

The Consumer Price Index (CPI) report will be released at 1230 GMT, with markets watching for signs that inflation eased in July despite last week’s unexpectedly strong US jobs numbers.

The market is pricing in a 69.5% chance of a 75 bps rate increase at the Fed’s next meeting FEDWATCH. Economists polled by Reuters expect the CPI to show year-on-year headline inflation of 8.7%, far above the Fed’s target of 2% but down from last month’s red-hot 9.1%.

Europe’s benchmark STOXX index fell 0.43%, following a bigger fall of 1.2% in the MSCI’s broadest index of Asia-Pacific shares outside Japan, while Japan’s Nikkei .N225 closed down 0.65%.

“I don’t think that we are through the bear market woods yet – recession risks loom and I don’t think the Fed is done with its aggressive belt tightening,” said David Chao, a global market strategist for Asia Pacific ex-Japan at Invesco.

“I don’t think markets have fully discounted these variables. This week’s inflation data will certainly give us more clarity of the Fed’s near-term policy outlook.”

US markets looked set to open broadly flat, with S&P 500 futures down 0.06%.

The dollar was steady, having paused from a retreat that began in the middle of July. The dollar index, which measures the safe-haven greenback against six major peers, was at 106.3.

“A strong CPI print this week could mean the Fed is back to its aggressive rate hiking path, which would re-strengthen the USD,” said Chao.

Euro zone bond yields held stead, with Germany’s 10-year yield, the benchmark for the bloc, down just one basis point at 0.91%.

Analysts noted the US data due Wednesday represent a lagging indicator that might not yet show inflation softening, and yield curves could flatten or invert further.

A flattening yield curve is usually seen as a sign of an economic slowdown and inversions as predictors of recessions. As measured by the gap between two- and 10-year yields, the US curve is deeply inverted at below minus 40 bps.

Oil prices fell after industry data showed US crude inventories unexpectedly rose last week, signalling a possible hiccup in demand. Brent crude futures fell 61 cents to USD 95.73 a barrel, while US West Texas Intermediate (WTI) crude was down 70 cents to USD 89.82.

Gold also pared gains and was down 0.26% at USD 1,789.5 an ounce. It briefly broke through the USD 1,800 barrier overnight for the first time in more than a month.

The cryptocurrency bitcoin, which often tracks tech stocks, was down 0.76% at USD 22,974

(Reporting by Sam Byford and Lawrence White; Editing by Lincoln Feast, Robert Birsel)

Japan’s Nikkei falls as chip stocks track US peers lower

TOKYO, Aug 10 (Reuters) – Japan’s Nikkei fell on Wednesday, dragged down by chip-related shares after Micron Technology led US tech heavyweights lower overnight, while investors awaited US inflation data that could influence the Federal Reserve’s tightening path.

The Nikkei share average closed 0.65% lower at 27,819.33, while the broader Topix edged 0.17% lower to 1,933.65.

The Nasdaq closed lower on Tuesday after a dismal forecast from Micron Technology (MU) pulled down chip makers and tech stocks.

Chip-making equipment maker Tokyo Electron fell 2.75% and chip-testing equipment maker Advantest lost 3.8%.

Other heavyweights also lost ground, with Uniqlo clothing shop owner Fast Retailing shedding 2.75% and medical services platform sliding 3.5%.

Companies that reported robust earnings gained. Sumitomo Forestry jumped 8.34% after the home builder forecast a full-year profit compared to its earlier estimate of a loss.

Rohto Pharmaceutical surged 14.1% after the drug maker raised its annual profit forecast.

“The market responded to stocks with positive earnings,” said Maki Sawada, a strategist at Nomura Securities.

But investors were cautious ahead of a local holiday on Thursday and as they awaited US inflation data that could guide the Federal Reserve’s rate-hike pace, she said.

There were 139 advancers on the Nikkei index against 84 decliners.

The volume of shares traded on the Tokyo Stock Exchange’s main board was 1.11 billion, compared with the average of 1.19 billion in the past 30 days.

(Reporting by Junko Fujita; editing by Uttaresh.V and Subhranshu Sahu)

Oil slips as US crude stockpiles rise

KUALA LUMPUR, Aug 10 (Reuters) – Oil prices eased on Wednesday after industry data showed US crude inventories unexpectedly rose last week, signaling a potential hiccup in demand, though concerns over supply kept losses in check.

Brent crude futures fell 23 cents, or 0.2%, to USD 96.08 a barrel at 0323 GMT.

US West Texas Intermediate crude futures declined 28 cents, or 0.3%, to USD 90.22 a barrel.

US crude stocks rose by about 2.2 million barrels for the week ended Aug. 5, according to market sources citing American Petroleum Institute figures.

Analysts polled by Reuters had forecast that crude inventories would rise by around 100,000 barrels.

Official government data is due on Wednesday at 10:30 a.m. EDT.

“Whatever crude demand destruction that occurs from a weakening global economy won’t be able to drag down oil prices much lower given how low the supply outlook remains,” said Edward Moya, senior market analyst at OANDA.

“Much attention is falling on Iran nuclear deal talks and that could be a wildcard in providing much needed supplies.”

The European Union on Monday put forward a “final” text to revive the 2015 Iran nuclear deal which would boost Iran’s crude exports. A senior EU official said he expected a final decision on the proposal within “very, very few weeks”.

Both oil benchmarks were volatile on Tuesday, both rising and falling by more than USD 1 a barrel during the session, but they settled slightly lower as investors weighed recessionary concerns with news that some oil exports had been suspended on the Russia-to-Europe Druzhba pipeline that transits Ukraine.

Ukraine halted oil flows on the Druzhba oil pipeline to parts of central Europe because Western sanctions had prevented a payment from Moscow for transit fees from going through.

Flows along the southern route of the Druzhba pipeline have been affected while the northern route serving Poland and Germany was uninterrupted.

The Czech Republic’s pipeline company MERO said it expected Russian oil supplies through the Druzhba pipeline to the Czech Republic to restart within several days.

Adding to supplies, the operator of the giant Kashagan oilfield in Kazakhstan has started gradually restoring output after an emergency shutdown last week caused by a gas leak. The Kashagan oilfield produces about 300,000 barrels per day.

Though concerns over a potential global recession have weighed on oil futures recently, US oil refiners and pipeline operators expect energy consumption to be strong for the second half of 2022, according to a Reuters review of company earnings calls.

(Reporting by Emily Chow in Kuala Lumpur and Stephanie Kelly in New York; Editing by Shri Navaratnam and Kim Coghill)

Gold eases from one-month peak as focus turns to US inflation

Aug 10 (Reuters) – Gold prices slipped on Wednesday from a more than one-month high due to an uptick in bond yields, while investors awaited US inflation data which is expected to influence the pace of Federal Reserve rate hikes.

Spot gold was down 0.3% at USD 1,789.29 per ounce, as of 0512 GMT, after hitting its highest since July 5 at USD 1,800.29 on Tuesday. US gold futures fell 0.3% at USD 1,806.10.

Benchmark US 10-year Treasury yields edged higher to 2.7990%, increasing the opportunity cost of holding non-interest-bearing gold.

“Clearly the focus is on US inflation data. Also, what’s really important is that where prices are currently trading with USD 1,800 being the very important level here,” said Ilya Spivak, a currency strategist at DailyFX.

“If the inflation number come in stronger than expected, following last week’s solid jobs report, we could see some of rate cut expectations for next year leave the forecast, which would be gold negative.”

Economists polled by Reuters expect US annual inflation to have eased to 8.7% last month from 9.1% in June. Core inflation is expected at 0.5% month-on-month. The data is due at 1230 GMT.

The Fed hiked rates by 75 basis points each in June and July to rein in soaring inflation. Although gold is seen as a hedge against inflation, higher US interest rates dull non-yielding bullion’s appeal.

Fed funds futures traders are now pricing for a 69.5% chance of another 75-basis-point rate increase at the US central bank’s next policy meeting in September.

“Central banks have warned that further rate hikes will be required to tame persistently high inflation. Investors expect July’s consumer price index to cool a bit,” ANZ analysts said in a note.

“However, strong wage growth and higher labour costs could undermine this.”

Spot silver fell 0.5% to USD 20.40 per ounce, platinum dipped 0.8% to USD 926.48, and palladium slipped 0.5% to USD 2,204.55.

(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu, Sherry Jacob-Phillips and Uttaresh.V)

Dollar edges higher as traders await US inflation report

NEW YORK, Aug 9 (Reuters) – The safe-haven dollar edged higher on Tuesday, erasing earlier losses as risk appetite dwindled ahead of key inflation figures that could offer clues on how aggressive the Federal Reserve will be in its expected interest rate hike in September.

The dollar index , which measures the currency’s value against a basket of peers, was up 0.047% at 106.38 at 3:15 p.m. Eastern time (1915 GMT).

The greenback had drifted lower in thin summer trading from the start of the session, but then reversed course as US stock markets slid on profit warnings, global inflationary concerns, and data that showed US worker productivity fell sharply in the second quarter.

“There’s a lot of global issues and we cannot ignore them and that puts a lot of downward pressure on global growth,” Juan Perez, director of trading at Monex USA said of the dollar’s safe haven appeal.

The big focus for traders is on Wednesday’s US Consumer Price Index report, which is expected to show that decades-high inflation eased in July following back-to-back 75-basis point hikes by the Fed in June and July.

But data on Friday showed that US employers hired far more workers than expected last month, with wages still rising at a strong clip, boosting bets for another mammoth rate hike by the Fed at its Sept. 20-21 meeting.

Money-market futures 0#FF: show traders see about a two-thirds chance of a 75 bps hike next month.

“We’ve been getting consistently hotter-than-expected inflation reports and if that happens again, the market is not prepared for that,” said Edward Moya, senior market analyst at Oanda. “If that happens, we’re testing parity again against the euro,” he said of the potential for more dollar strength.

The euro was up 0.2% at USD 1.0204, sterling dipped 0.12% to USD 1.2065. Versus the yen, the dollar was fell 0.14 at 135.195 yen.

Economists polled by Reuters see year-on-year headline inflation at 8.7% – relatively high, but below last month’s 9.1% figure. The Fed targets inflation at 2%.

Heightened expectations for aggressive near-term hikes, have pushed short-dated Treasury yields further above long-term peers.

The gap between two and 10-year Treasury yields, a reliable recession indicator, has grown to its largest in two decades. US/

“The US yield curve is inverted, suggesting recession down the line. But equity markets look as if they believe the Fed is going to stop soon and start cutting in 2023,” said Mizuho senior economist Colin Asher.

“I think tomorrow’s CPI data will suggest the Fed is not going to stop, which to me suggests weaker equity markets ahead which will limit any dip in the dollar in the next few months.”

The dollar’s safe haven status, though, makes the greenback’s reaction a little harder to predict, especially as growth and geopolitical worries swirl.

China extended military drills near Taiwan, and the self-ruled island’s foreign minister said China was using the drills launched in protest against US House Speaker Nancy Pelosi’s visit as an excuse to prepare for an invasion.

Elsewhere, Australia’s dollar, viewed as a barometer of market risk, dropped 0.41% to USD 0.6955 and New Zealand’s dollar slid 0.14% to USD 0.62765.

(Reporting by John McCrank in New York; additional reporting by Dhara Ranasinghe in London; Editing by Susan Fenton and Alistair Bell)

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