Asia Stocks Fall Ahead of PCE; Yen Swings on BOJ:
- BOJ governor nominee Ueda sees inflation peaking in Japan
- US inflation data on Friday is expected to show acceleration
Stocks in Asia dropped, while contracts for US equities edged lower as investors awaited key data for clues on the Federal Reserve’s rate-hike campaign.
A gauge of Asian equities was on course for a fourth straight weekly decline, the longest losing streak since September. Hong Kong-listed tech stocks led the drop following results from e-commerce giant Alibaba Group Holding Ltd., with analysts staying cautious on the company’s revenue outlook.
US stock futures slipped after Wall Street benchmarks closed higher on Thursday in a volatile session as investors await Friday’s release of the personal consumption expenditures index — the Fed’s preferred price gauge — which is expected to show acceleration amid robust income and spending growth.
Japanese markets are under the spotlight, with data Friday showing accelerating inflation as the government’s nominee to be the next central bank governor faced his first grilling in parliament.
The yen pared gains and swung to a small loss against the greenback as Kazuo Ueda told lawmakers he saw inflation peaking. He said the current policy easing was appropriate but added that the central bank could move toward normalization if stable 2% inflation comes into sight.
The dollar was little changed against most major currencies and Treasuries looked set to continue their advance into a third day.
Acceleration shown by the PCE Index would add to a string of unfavorable figures that bolster the case for the central bank to hold rates at 5.25% for some time, according to Bloomberg Economics’ Anna Wong. The current benchmark sits in a range between 4.5% and 4.75%.
“Whatever happens, the dollar is very much in focus today – it’s likely to remain bid should PCE and inflation expectations move higher,” according to Matthew Simpson, an analyst at City Index.
Billionaire quant investor Cliff Asness warned that US stocks are vulnerable to a macro shock if inflation doesn’t stage a spirited decline as the market expects. JPMorgan Chase & Co.’s chief Jamie Dimon told CNBC there’s still a chance for a soft landing for the US economy, though “out in front of us there’s some scary stuff.”
The Adani Group will hold a fixed-income investor roadshow in Asia next week. The Indian conglomerate is boosting outreach to investors after its bonds and stock slumped following a critical report from short-seller Hindenburg Research published last month.
Oil extended Thursday’s advance, when it snapped its longest losing streak since December amid strength in commodity currencies and signs of appetite for risk taking. Gold ticked higher.
Elsewhere, Bitcoin was on pace for its second monthly advance, breaking with stocks and other riskier assets that have slid amid renewed concern about rising interest rates. The crypto market’s rally recovers only a sliver of the ground lost last year, when prices tumbled and the collapse of the FTX exchange caused a pullback by investors.