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ASIA MARKETS: Shares Mixed, Dollar Drops Ahead Of US Inflation Data

Wednesday,   13-Oct-2021   09:58 AM (IST)

Asian shares were trading mixed and the dollar edged lower ahead of data that is expected to show that inflation in the U.S. remained elevated. Shares in Japan and Australia declined 0.2% each. In South Korea, stocks were up about a percent. Chinese equities were little changed while Hong Kong cancelled the morning trading session on account of tropical cyclone Kompasu. Singapore’s index climbed 1.3%, led by property-related companies and lenders.  The FTSE Bursa Malaysia KLCI Index was up 0.4% at 1,590.10, hovering near its highest in a month. Sime Darby and Hartalega Holdings were the top performers. Futures on the S&P 500 Index slipped ahead of data that is projected to show that consumer prices in the U.S. rose 5.3% year-on-year last month. The data comes amid heightened worries over whether the current high inflation phase would endure longer than what central bank officials had expected, putting at the risk the economic recovery. Persisting pandemic-related supply bottlenecks combined with rising commodity and energy costs have lifted inflation expectations. A survey by the New York Fed Reserve showed that U.S. consumers increased their short-term and medium-term inflation expectations once again in September. Median expectations on inflation over the next year climbed 5.3%, the highest level since the survey was launched eight years back, according to Reuters. The pickup in inflation expectations has prompted worries on the outlook for the U.S. Federal Reserve and other central banks. A few Fed officials in recent days have indicated that they are now more worried about inflation. Yesterday, Atlanta Fed President Raphael Bostic said the recent inflation surge is lingering longer than expected and hence it would not be appropriate to use the term transitory. Another Fed official, in an interview to CNBC, said there was a 50-50 chance that high inflation was transitory and policymakers should be ready. In its World Economic Outlook that was released on Monday, the IMF called on central banks to be vigilant on inflation and take action before price pressures become permanent. The 10-year U.S. yield was hovering near 1.58% ahead of the inflation data. The dollar index dropped 0.2% to 94.34, pulling back from one-year highs. The South Korean won led Asian currencies higher, advancing 0.4%. The Singapore dollar was up 0.2% and the Malaysian ringgit rose by the same margin to 4.1550 to the dollar. The Chinese yuan inched higher to 6.4458 after September exports and imports increased more than forecast.