Asian markets are reeling from inflation and rate concerns

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HONG KONG (Reuters) – Asian stocks faced an uncertain start on Monday as negative inflationary fears and the possibility of an interest rate hike dodged the global economic outlook, leaving negative sentiment.

The MSCI broad index of Asia-Pacific shares outside of Japan was up 0.04%, after US stocks ended the previous session with negligible gains for the day. The index has fallen 3.6% so far this month.

In early trade, Australian stocks rose 0.2% while Japan’s Nikkei stock index was up 0.85%.

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The benchmark 10-year Treasury note yield rose 2.7883% from the U.S. close of 2.787% on Friday.

The two-year yield, which was raised by traders in anticipation of higher Fed funds rates, touched 2.583% to 2.5869%.

Uncertainty in market sentiment this week followed the S&P 500’s slight gain of just 0.01% on Friday.

The Nasdaq fell 0.30% while the Dow Jones Industrial Average rose 0.03%.

Despite marginal gains, the S&P 500 and Nasdaq recorded their seventh consecutive week of losses, the longest streak since the dotcom bubble ended in 2001.

The Dow has suffered its eighth consecutive weekly fall, the longest since 1932 during the Great Depression.

German wholesale inflation figures released on Friday showed higher-than-expected jumps, indicating that prices will rise in the short term. Inflationary pressures remain high for investors.

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Germany’s producer price index rose 2.8% month-on-month in April, meaning annual growth was a steady high of 33.5%.

In Australia, the Labor Party ended nearly 10 years of conservative rule in a general election over the weekend.

Although Labor has promised climate, housing and improved social welfare reforms, analysts do not believe the change of government will have a major impact on the country’s economy.

CBA economists wrote on Monday, “In our view, it was rarely suggested by the incoming government during the election campaign that we should reconsider our economic forecast at this stage.”

“In other words, despite the change in national leadership, our economic forecast and calls to the RBA remain unchanged.”

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In early Asian trade, the dollar rose 0.04% against the yen to 127.9. It is still some distance from the high of 131.34 on 2022-05-09.

US crude was down 0.04% at $ 110.24 a barrel. Brent crude rose 0.23% to 2 112.68 a barrel.

Concerns over global economic growth have prompted renewed support for gold.

“Gold prices saw their first weekly gains since mid-April as demand for safe havens increased amid concerns about economic growth amid high inflation,” ANZ analysts said in a research note on Monday. “A weaker US dollar has increased the appetite of investors.”

Spot gold was up 0.3% at 47 1847.0226 per ounce at the start of Monday.

(Edited by Sam Holmes)