Asia Shares Alarmed by U.S. Inflation, Count on Calm Fed


Asian shares slipped to sevenweek lows on Thursday after a shocking rise in U.S. inflation bludgeoned Wall Street and sent bond yields surging on worries the Federal Reserve might have to move early on tightening.

Higher inflation is a definite negative for equities, given the likely rates response, said Deutsche Bank macro strategist Alan Ruskin.

The more nominal GDP gains are dominated by higher inflation, especially wage inflation, the more the possible squeeze on profit margins. It plays to a more choppy, less bullish equity bias.

MSCIs broadest index of AsiaPacific shares outside Japan lost 0.9, though trade was thinned by holidays in a number of countries.

Japans Nikkei fell 2.0 and touched its lowest since early January, while Chinese blue chips lost 0.9.

Asian markets were already on the backfoot this week amid inflation worries and a tech selloff on Wall Street, and nerves were further jangled on Wednesday when Taiwan stocks tumbled on fears the island could face a partial lockdown amid an outbreak of the virus.

Nasdaq futures were trying to rally with a gain of 0.4, while SP 500 futures added 0.3. But EUROSTOXX 50 futures were still catching up with overnight falls and lost 0.7, while FTSE futures shed 0.5.

Wall Street was blindsided when data showed U.S. consumer prices jumped by the most in nearly 12 years in April as booming demand amid a reopening economy met supply constraints at home and abroad.

The jump was largely due to outsized increases in…


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