Asia shares mixed on Fed warning, China hopes

  • https://tmsnrt.rs/2zpUAr4
  • Fed’s Waller plays down CPI as just one number
  • Beijing lays out property support, COVID measures
  • Biden to meet Xi at the G20 meeting

SYDNEY, Nov 14 (Reuters) – Asian stock markets were mixed on Monday as a top U.S. central banker warned investors not to get carried away by one inflation number, while Chinese stocks rose on signs of help for the battered property sector.

A modest miss on US inflation was enough to see two-year Treasury yields fall 33 basis points for the week and the dollar lose nearly 4%, the fourth biggest weekly drop since the era of free-floating exchange rates began more than 50 years ago has.

However, the resulting easing in US financial conditions was not entirely welcomed by the Federal Reserve, with Governor Christopher Waller saying it would take a string of soft reports for the bank to take its foot off the brakes. read more

Waller added that the markets were way ahead of themselves with just one inflation push, although he conceded the Fed could now start thinking about hiking at a slower pace.

Futures are betting heavily on a half-point rate hike to 4.25-4.5% in December and then a couple of quarter-point moves to a peak in the 4.75-5.0% range.

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Two-year yields rose to 4.41%, after plunging as low as 4.29% on Friday.

“The CPI downside surprise is consistent with a broad range of indicators pointing to a shift in global inflation that should encourage a moderation in the pace of monetary policy tightening at the Fed and elsewhere,” said Bruce Kasman, head of economic research at JPMorgan.

“This positive message must be tempered by the recognition that the slide in inflation will be too little for central banks to declare mission accomplished, and more tightening is likely on the way.”

MSCI’s broadest index of Asia-Pacific shares outside Japan ( .MIAPJ0000PUS ) added 0.8%, after jumping 7.7% last week.

Japan’s Nikkei (.N225) weakened 0.6%, while South Korea (.KS11) was flat. S&P 500 futures fell 0.3% and Nasdaq futures lost 0.4%.

EUROSTOXX 50 futures rose 0.4%, while FTSE futures rose 0.1%.

EYES ON CHINA

Traders also waited to see if Chinese shares could extend their big rally amid reports that regulators had asked financial institutions to provide more support to strained property developers. read more

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China’s property index (.CSI000952) rose 5% in response. Blue chips (.CSI300) rose 1.4%, helped by a slew of changes to China’s COVID curbs, even as the country reported more cases over the weekend. read more

“It’s hard to see how the case news from an economic point of view is anything but negative, but it is symbolic of the movement, however small, in the zero COVID strategy that markets are happily clinging to,” said Ray Attrill, chief of FX strategy. at NAB.

US President Joe Biden will meet Chinese leader Xi Jinping in person on Monday for the first time since taking office, with US concerns over Taiwan, Russia’s war in Ukraine and North Korea’s nuclear ambitions high on his agenda. read more

The news about COVID rules fueled a short-covering bounce in the yuan last week, adding to broad pressure on the dollar as yields fell. The dollar regained some ground early Monday as its index added 0.4% to 106,870, but remained well short of last week’s 111,280 peak.

The euro eased a bit to $1.0324, after climbing 3.9% last week, while the dollar firmed to 139.27 yen after last week’s 5.4% drop.

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The dollar lost almost as much as the Swiss franc, led in part by warnings from the Swiss National Bank that it would use rates and currency purchases to tame inflation. read more

Sterling fell back to $1.1790 on Thursday ahead of the UK Chancellor’s autumn statement where he is expected to outline tax increases and spending cuts. read more

Cryptocurrencies remained under pressure as at least $1 billion of client funds were reported to have disappeared from collapsed crypto exchange FTX. read more

Bitcoin fell 1.5% to $16,055, after losing almost 22% last week.

The dollar’s recent retreat provided a much-needed boost to commodities, with gold holding at $1,763 an ounce after jumping more than $100 last week.

Oil futures extended their gains on hopes of an increase in Chinese demand with Brent up 63 cents at $96.62, while US crude rose 56 cents to $89.52 a barrel.

Reporting by Wayne Cole; Editing by Shri Navaratnam

Our Standards: The Thomson Reuters Trust Principles.

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