- Dollar remains firm, crypto fuels spillover fears
- European markets are set to open lower
- Mainland China, Hong Kong stocks hit by surge in COVID cases
- Focus on US inflation for signs of slowdown in Fed rate hike
SYDNEY, Nov 10 (Reuters) – Asian stock markets retreated on Thursday and the dollar held on to overnight gains ahead of the big test of a U.S. consumer inflation report, while market sentiment took a dive as the likely collapse of a major crypto exchange scared investors. .
With no final results from the US midterm elections available, investors turned to upcoming inflation data later in the day, which is likely to show a slowdown in both the monthly and annual core numbers for October to 0.5% and 6.5% respectively. , according to a Reuters poll.
European markets are set to extend the cautious mood, with pan-regional 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) fell 1.2%, dragged down by a 1.0% drop in China’s blue chips (.CSI300) and a 1.8% retreat in Hong Kong’s Hang Seng Index (.HSI).
Japan’s Nikkei (.N225) lost 1.0%.
China is again grappling with a COVID surge, with the southern metropolis of Guangzhou reporting thousands of cases. Apple Inc ( AAPL.O ) supplier Foxconn ( 2317.TW ) plans to update its fourth-quarter outlook on Thursday, after strict COVID curbs remained in place at its major plant in China despite lifting a shutdown.
Elsewhere, the focus remained squarely on inflation.
“The high likelihood is that we’ll see a number that’s pretty much in line with expectations — that’s obviously harder to call, and we may have to wait for guidance from Fed speakers in the session ahead to see how they it interprets,” says Chris Weston, head of research at broker Pepperstone.
Minneapolis Federal Reserve Bank President Neel Kashkari said Wednesday it was “completely premature” to discuss any pivot away from the Fed’s current policy tightening.
A host of Fed officials, including Board Governor Christopher Waller, Bank of Philadelphia President Patrick Harker, Bank of Dallas President Lorie Logan, will speak tonight.
The futures market currently showed that investors believe the Fed could ease back 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 ended lower as Republican gains in midterm elections appeared more modest than some had expected. Republicans were still favored to win control of the House of Representatives, but key races were too close to call.
In the crypto world, bitcoin rose 3.6% to $16,443 on Thursday, after tumbling to its lowest level since late 2020 for two straight sessions.
Binance, the world’s largest crypto exchange, said late Wednesday it had decided not to acquire smaller rival FTX, which has been struggling with a severe liquidity crisis and faced bankruptcy without more capital.
“You can’t deny the growing correlation between bitcoin and risk assets. The FTX news has a disproportionate effect on asset prices,” said Stephen Innes, managing partner at SPI Asset Management.
“Bitcoin spillovers are not negligible, and given how widely cryptocurrencies are held, this could mean more forced liquidation of other assets to cover margin calls as long investors were largely wrong.”
The US dollar held on to most of its overnight gains against a basket of currencies on Thursday.
Sterling rose 0.4% against the dollar to $1.1409, after tumbling 1.6% in the previous session.
US Treasury yields were lower on Thursday.
The yield on benchmark 10-year notes fell 8 basis points to 4.0751%, while the yield on two-year notes fell 3 basis points lower to 4.5963%.
In commodities, oil prices pared earlier losses on Thursday, after tumbling about 3% in the previous session on fears of demand from China and rising US crude inventories.
U.S. crude futures were flat 0.3% to $85.83 a barrel, while Brent crude futures stabilized at $92.71.
Gold was higher, with the spot price at $1,709.08 an ounce.
Reporting by Stella Qiu; Editing by Bradley Perrett and Sam Holmes
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