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Asian shares rise amid inflation fears, dollar at one-year high, with the euro at a one year high

Asian shares rise amid inflation fears, dollar at one-year high, with the euro at a one year high

  • Summary:
  • Dlr nears 3 year high against yen; 1-year high vs basket of peers; 3-year low compared to basket.
  • Oil prices have edged lower, but are still well above multi-year highs.
  • Investors waiting for Chinese trade, according to U.S. CPI figures, investors are increasingly turning to China, citing Ulysses CCI data.
  • Hong Kong closed for typhoon after a few days of calm in Asia. Most Asian stock markets were sluggish, with many of the major banks halted because of cyclone.

Asian shares were trading high on Wednesday as fears about rising power prices fuelling inflation weighed on sentiment and drove hopes that the United States would resume its emergency bond buying programme, keeping the dollar at a one-year high.

MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 0.1% in early trading, beating its previous high of over 1% a day earlier, in what was its worst daily performance in three weeks.

In the majority of markets, moves were muted. Chinese blue chips (.CSI300) remained flat, while Australia (AXJO) posted a 0.06% increase, and Japan's Nikkei (.99N225) shed 0.2%.

Hong Kong's stock market was shut in the morning because of a typhoon, which forced the market to close in early morning.

Investors are also anticipating a slew of data releases due to be released Wednesday, including China trade figures, U.S. consumer price inflation data, and minutes of the Federal Reserve's September policy meeting.

The imminent start of the company earnings season also stifled some investors from placing large bets.

Stefan Hofer, LGT's chief investment strategist in Asia Pacific, stated, "This week, inflation is overriding pretty much everything else, because that pushes Fed expectations one way or the other and that'' s so dominant."

"This earnings season is also crucial because, like in the previous one, earnings in particular in America were very strong, partly due to the base effect. "The third quarter may be a little more standard," he added.

The Federal Reserve in the United States is getting closer to starting to taper its massive pandemic bond purchase programme, a move complicated by growing worries that rising energy costs will fuel inflation while also halting the economic recovery.

Oil prices are currently near multi-year highs, but they were steady in Asian morning trading.

Brent crude dropped 0.29% to $83.18 a barrel, just off Monday's three-year high of $84.6, while U.S. crude fell 0.2% to $80.38 from Mondays seven-month high.

Despite increasing inflation worries, there is growing optimism about the economic recovery. Three U.S. Federal Reserve policymakers on Tuesday said the United States' economy has healed enough for the central bank to begin withdrawing its crisis-era support. Read more

Stocks on Wall Street slid overnight, resulting in a blip. The Dow Jones Industrial Average (.DJI) fell 0.34%, the S&P 500 (.SPX) lost 0.24% and the Nasdaq Composite ( ( IXIC) dropped 0.14%.

The liklihood absorption also meant the dollar was strong, sitting just below a one-year high versus other majors hit the previous day.

The dollar index was last at 94.413, just off Tuesday's high of 94.563, the highest since September 2020.

It was particularly strong against the yen, with one dollar buying 113.39 Yen in sight of Monday's near three year low. As Japan purchases the bulk of its oil from overseas, the yen makes it more susceptible to the high prices a week later.

The spot price increased 0.04% to $1,760 an ounce, in the middle of this month's range, ahead of the U.S. data, with the spot value up 0.24%.

Lincoln Feast is the editor of Lincoln's Editing.

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