Stock indices were mixed in Asia on Monday after a sell-off on Wall Street late last week as investors raised expectations for US interest rates after hot inflation data.
Stock prices fell in Australia and South Korea while stock prices in China and Japan fluctuated. Hong Kong’s Hang Seng Index initially started on its way to erasing 2023 gains before swinging slightly higher, supported by a jump of up to 20% in Haidilao International Holding Ltd shares after optimistic earnings expectations.
Futures rose in the United States, after Friday’s drop of more than 1% for the S&P 500 and the Nasdaq 100, which both suffered their worst week since December.
Investors worried about riskier assets in the wake of an unexpected acceleration in January of the US personal consumption expenditures price index, the Fed’s preferred inflation measure. Friday’s release of PCE data prompted a rapid repricing of interest rate expectations, with traders now pricing in US interest rates peaking at 5.4% this year, compared to expectations just under 5% a month ago.
“It seems premature to expect a shift in risks this week,” Chris Weston, head of research at Pepperstone Group, said in a note on Monday. “The clouds of uncertainty remain with us as it is clear that the prevailing view in the market is that inflation will trend lower through year may face challenges.
dollar movement
The yen strengthened against the dollar after a sharp drop on Friday as Bank of Japan governor nominee Kazuo Ueda awaited another speech in the Japanese parliament on Monday, while inflation data released last week showed that prices in the country were rising at the fastest pace in four decades, adding to the pressure. The central bank should reassess its loose policy settings.
The yield on the 10-year Treasury fell by 1 basis point in Asia on Monday after a jump of seven basis points on Friday.
Higher yields continued to support the dollar, although the greenback index fell marginally after rising 0.7% on Friday.
Australia’s 10-year yield rose seven points while New Zealand’s 10-year yield rose three basis points and was near the highest level since November.