Asian equity markets declined on Wednesday as traders braced for the latest data on US inflation, which could influence the direction of the Federal Reserve’s monetary policy.
Hong Kong’s Hang Seng index shed as much as 1.8 percent, China’s CSI 300 declined 0.6 percent and Japan’s Topix was down 0.6 percent.
US consumer inflation reached 9.1 percent in June, the highest level in 40 years, and the central bank has met with back-to-back interest rate increases of 0.75 percentage points.
Economists polled by Reuters expect month-on-month headline inflation of 0.2 percent and a year-on-year rate of 8.7 percent. Markets are pricing in the possibility of another 0.75 percentage point rise at the central bank’s next policy meeting in September.
In government bond markets, the yield on the two-year US Treasury notes, which moves with interest rate expectations, shed 0.02 percentage points, having added 0.05 points on Tuesday. The yield on the 10-year note, which moves with inflation and growth expectations, edged 0.01 percent lower, having also gained the previous day.
Wednesday’s market moves followed the release of Chinese inflation data, which showed consumer prices rising by a less-than-expected 2.7 percent year-on-year and 0.5 percent compared to the previous month.
The moves were led by the tech sector, which is particularly sensitive to inflation and interest rate expectations, with the Hang Seng Tech index dropping as much as 3.1 percent. The biggest declines were for electric-car makers Nio, Xpeng, and Li Auto, which shed as much as 7.2 percent, 6.6 percent, and 6.9 percent, respectively.
Oil prices were little moved on Wednesday, with international benchmark Brent crude and US marker West Texas Intermediate both flat at $96.25 and $90.30 per barrel, respectively.
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