- Dollar Holds Firm, Fears Crypto Stock Spillover
- European markets continue to trend lower
- Shares in mainland China, Hong Kong, were hit by a rise in Covid cases
- Focus on US inflation for signs of Fed rate hike slowdown
SYDNEY, Nov 10 (Reuters) – Asian stock markets retreated on Thursday and the dollar held on to its overnight gains ahead of a big test of the U.S. consumer inflation report, while a possible fall in a major crypto exchange weighed on market sentiment as investors spooked.
With no conclusive results from the US mid-term elections, investors were looking ahead to upcoming inflation data, which could show a slowdown to 0.5% and 6.5% in both October’s monthly and annual core numbers, respectively. , according to a Reuters poll.
European markets are poised to extend the cautious mood, with pan-region euro STOXX 50 futures down 0.7%. However, US S&P 500 futures rose 0.2% while Nasdaq futures rose 0.3%.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) Declined 1.2%, dragged down by a 1.0% drop in China’s bluechips (.CSI300) and a 1.8% retreat in Hong Kong’s Hang Seng index (.HSI).
Japan’s Nikkei (.N225) 1.0% lost.
China is once again battling a Covid wave with the southern metropolis of Guangzhou Thousands of cases reported. Apple Inc. (AAPL.O) Supplier Foxconn (2317.TW) the plan Update its fourth quarter Outlook on Thursday, after strict COVID restrictions remained in place at its main plant in China despite the lifting of lockdowns.
Elsewhere, the focus was on inflation.
“The high probability is that we’re going to see a number that’s pretty much in line with expectations — it’s obviously hard to call, and we may have to wait for guidance from Fed speakers next session to see how they interpret it,” said Chris Weston, Head of Research at brokerage Paperstone.
Minneapolis Federal Reserve Bank President Neil Kashkari said Wednesday that it was “absolutely premature” to discuss any pivot away from the Fed’s current policy tightening.
Several Fed officials will speak tonight, including Board Governor Christopher Waller, Bank of Philadelphia President Patrick Harker, Bank of Dallas President Lori Logan.
Futures markets currently lead investors to believe the Fed could cut to a 50 basis point hike next month, while the target US federal funds rate could peak around 5.1% by next June.
Overnight on Wall Street, stocks fell as Republican gains in the midterm elections were more modest than some expected. Republicans were still in favor win control But the key race in the House of Representatives was too close to call.
In the crypto world, bitcoin rose 3.6% to $16,443 on Thursday, hitting its lowest level since the end of 2020 for two straight sessions.
Binance, the world’s largest crypto exchange, said late Wednesday that It decided not to to acquire smaller rival FTX, which was grappling with a severe liquidity crisis and facing bankruptcy without much capital.
“You can’t deny the growing correlation between Bitcoin and risk assets. The FTX news is having a big impact on asset prices,” said Stephen Innes, managing partner at SPI Asset Management.
“The Bitcoin spillover is not insignificant, and given how widely held the crypto coin is, it could mean more forced liquidation of other assets to cover margin calls as investors with long positions were massively mis-directed.”
The US dollar held on to much of its overnight gains against a basket of currencies on Thursday.
Sterling gained 0.4% against the greenback to $1.1409, after falling 1.6% in the previous session.
US Treasury yields were lower on Thursday.
The yield on the benchmark 10-year note eased 8 basis points to 4.0751% while the yield on the two-year note eased 3 basis points to 4.5963%.
In commodities, oil prices pared earlier losses on Thursday after falling nearly 3% in the previous session on fears of rising Chinese demand and US crude stockpiles.
U.S. crude oil futures were flat at $85.83 a barrel, up 0.3%, while Brent crude futures were steady at $92.71.
Gold was higher, with a spot price of $1,709.08 an ounce.
Reporting by Stella Q; Editing by Bradley Perrett and Sam Holmes
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