Asian shares slipped to seven-week lows on Thursday after a dismaying rise in U.S. inflation bludgeoned Wall Street and sent bond yields surging on worries the Federal Reserve might have to move early on tightening.
“Higher inflation is a definite negative for equities, given the likely rates response,” said Deutsche Bank macro strategist Alan Ruskin.
“The more nominal GDP gains are dominated by higher inflation, especially wage inflation, the more the possible squeeze on profit margins. It plays to a more choppy, less bullish equity bias.”
MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.6%, though trade was thinned by holidays in a number of countries.
Japan’s Nikkei fell 1.8%, and touched its lowest since early January, while Chinese blue chips lost 0.7%.
Asian markets were already on the backfoot this week amid inflation worries and a tech sell-off on Wall Street, and nerves were further jangled on Wednesday when Taiwan stocks tumbled on fears the island could face a partial lockdown amid an outbreak of the virus.
Nasdaq futures were trying to rally with a gain of 0.5%, while S&P 500 futures added 0.4%. But EUROSTOXX 50 futures were still catching up with overnight falls and lost 0.5%, while FTSE futures shed 0.3%.
Wall Street was blindsided when data showed U.S. consumer prices jumped by the most in nearly 12 years in April as booming demand amid a reopening economy met supply constraints at home and abroad.
The jump was largely due to outsized increases in airfares, used cars and lodging costs, which were all driven by the pandemic and likely transitory.
Fed officials were quick to play down the impact of one month’s numbers, with vice chair Richard Clarida saying stimulus would still be needed for “some time”.
“It likely would take a very strong May jobs report, with sizable upward revisions to March and especially April, to get the Fed to start a discussion about tapering at its June meeting,” said JPMorgan economist Michael S. Hanson.
“We continue to expect the Fed to begin scaling back its pace of asset purchases early next year.”
Investors reacted by pricing in an 80% chance of a Fed rate hike as early as December next year.
Yields on 10-year Treasuries steadied at 1.68%, having climbed 7 basis points overnight in the biggest daily rise in two months. The yield curve also steepened markedly.
That was a shot in the arm for the dollar, which had been buckling under the weight of rapidly expanding U.S. budget and trade deficits. The euro retreated to $1.2082, leaving behind a 10-week peak at $1.2180.
The dollar stood at 109.60 yen, having hit a five-week top of 109.78 and well off this week’s low of 108.34. The dollar index hovered at 90.672, up from a 10-week trough of 89.979.
In the crypto currency space, Bitcoin steadied after sliding more than 10% when Elon Musk tweeted that Tesla Inc has suspended the use of bitcoin to purchase its vehicles.
The rise in yields and the dollar pressured gold, which was left at $1,819 an ounce and off a multiple-top around $1,845. [GOL/]
Oil prices backed away from two-month highs, hit after U.S. crude exports plunged and the International Energy Agency (IEA) said demand was already outstripping supply. [O/R]
Brent was off 46 cents at $68.86 a barrel, while U.S. crude lost 47 cents to $65.61.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
