Asia markets mixed after U.S. inflation rises faster than expected; Singapore tightens monetary policy

Key Points

• Shares in Asia-Pacific were mixed on Thursday after a hotter-than-expected inflation report in the U.S.
• Consumer prices rose 9.1% from a year ago, above the 8.8% Dow Jones estimate. That’s the fastest pace since November 1981.
• Taiwan’s chipmaker TSMC and Japan’s Fast Retailing are due to report earnings Thursday.

SINGAPORE — Shares in Asia-Pacific were mixed on Thursday after a hotter-than-expected inflation report in the U.S. Singapore’s GDP missed expectations and the country’s central bank tightened monetary policy.

The Nikkei 225 in Japan pared losses and rose 0.37% while the Topix index was flat.

In South Korea, the Kospi was 0.38% lower and the Kosdaq was just above the flatline.

Australia’s S&P/ASX 200 was 0.35% higher.

The Hang Seng index in Hong Kong slipped 0.36% in early trade.

Mainland China markets traded lower. The Shanghai Composite fell 0.54% and the Shenzhen Component dipped 0.124%.

MSCI’s broadest index of Asia-Pacific shares outside Japan slid 0.33%.

Consumer prices rose 9.1% from a year ago, above the 8.8% Dow Jones estimate. That’s the fastest pace since November 1981, and investors are concerned about how aggressive the Fed will have to be to fight rising prices.

“Stubbornly high inflation increases the risk that the FOMC continues to hike aggressively and triggers a recession,” Kristina Clifton, an economist at Commonwealth Bank of Australia wrote in a note Thursday.

Already, two Wall Street firms are speculating that the Fed could go for a 100-basis-point rate hike this month, which Canada’s central bank did on Wednesday.

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In economic data, Singapore’s Ministry of Trade and Industry said advance estimates show the country’s gross domestic product grew 4.8% in the second quarter of 2022 compared to the same period a year ago. That’s up from 4% in the first quarter of the year, but lower than the 5.2% growth that analysts in a Reuters poll expected.

The Monetary Authority of Singapore tightened monetary policy in an off-cycle move Thursday. The central bank said it will re-center the mid-point of the exchange rate policy band, known as the Singapore dollar nominal effective exchange rate, up to its prevailing level.

The slope and width of the band will not change, the MAS said. The central bank manages monetary policy through setting the exchange rate and not interest rates.

Singapore’s Straits Times index fell 0.43% on Thursday, while the Singapore dollar rose to 1.3954 against the greenback following the announcement.

“The SGD should be supported in the near term by this surprise tightening, but stubbornly high inflation means we can’t rule out further action from the MAS in October,” according to a Thursday note from ING.

Overnight in the U.S., stocks declined following the inflation report.

The Dow Jones Industrial Average dropped 208.54 points, or 0.67%, to 30,772.79, while the S&P 500 slid 0.45% to 3,801.78. The Nasdaq Composite fell 0.15% to close at 11,247.58.

The yield curve inversion in U.S. Treasury, seen as a recession signal, widened on Wednesday stateside. The 2-year yield last stood at 3.1879%, higher than 2.9521% for the 10-year note. Yields move inversely to prices.

Australia added 88,400 jobs in June, official data showed, much more than the 30,000 that analysts polled by Reuters predicted.

The country’s unemployment rate was at 3.5%, lower than the 3.8% expected.

Taiwan’s chipmaker TSMC and Japan’s Fast Retailing are due to report earnings Thursday as well.

TICKER	COMPANY	NAME	PRICE	CHANGE	%CHANGE
.N225	Nikkei 225 Index	*NIKKEI	26664.77	186	0.7
.HSI	Hang Seng Index	*HSI	20814.39	16.44	0.08
.AXJO	S&P/ASX 200	*ASX 200	6642.4	20.8	0.31
.SSEC	Shanghai	*SHANGHAI	3277.89	-6.4	-0.19
.KS11	KOSPI Index	*KOSPI	2325.66	-2.95	-0.13
.FTFCNBCA	CNBC 100 ASIA IDX	*CNBC 100	7918.13	-3.98	-0.05

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, briefly slipped below 108, but was last at 108.394.

The Japanese yen traded at 137.89 per dollar, and the Australian dollar changed hands at $0.6741.

Oil futures rose slightly in Asia trade. U.S. crude inched up 0.07% to $96.37 per barrel, while Brent crude climbed 0.19% to $99.76 per barrel.

Source : CNBC