Asia stocks drop to month low as US CPI fails to enthuse

 Asian stocks fall to monthly lows as US CPI fails to excite

SYDNEY (Reuters) - Asian shares hit a one-month low and posted a weekly loss on Friday, while the dollar headed for a monthly gain after U.S. inflation steadied with no surprises on the downside.Weak demand for the 30-year Treasuries auction and a plunge in the US budget deficit also weighed on bonds, with their higher yields in turn giving the dollar a leg up - especially against the yen pinned by yield controls in Japan.

The yen touched a six-week low of 144.89 per dollar in early trading, although volumes thinned due to a public holiday in Japan. [FRX/] Its stock markets were closed and government bonds were not traded in the Asian session.

US stock futures were flat and European futures fell 0.5%. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.7%, with shares in Hong Kong and China the biggest drag. It fell 1.6% for the week.

Headline US CPI was 0.2% last month, the same as a month ago, and the details were encouraging - core inflation slowed and only rents proved stubborn.Still, a few hours later, San Francisco Fed President Mary Daly told Yahoo Finance that while that was welcome, there was "still more work to do" for policymakers.

"I think the market was hoping with the inflation data that we'd hear Fed speakers say it's unlikely we'll need to hike any further and the next step is a cut," said Andrew Lilley, chief rates strategist at investment bank Barrenjoey. in Sydney.

Benchmark 10-year Treasuries initially rose on inflation, but yields were seven basis points higher at 4.11% by the close in New York. Two-year yields rose two basis points to 4.82%.Thirty-year yields jumped six basis points to 4.24% after the $23 billion auction landed a basis point above where the market traded. Primary dealers are left with 12.5% ​​of sales. [OUR/]

Australian government bonds came under pressure in Asia on Friday, although outgoing Reserve Bank of Australia chief Philip Lowe told lawmakers the worst of inflation was over and policy had now entered a "calibration phase".

"The US and Australia have pretty much done their job to tame their inflation," said Nozomu Ogawa, managing director of fixed income at Daiwa Capital Markets in Sydney."The market should recover from current levels," he said, with yields of over 4% attractive to Japanese investors.

DOLLAR PROFITS

In foreign exchange markets, choppy trade on the back of inflation data left the dollar on course for a weekly gain.The euro fell slightly to $1.0988 for the week. It was just looking at a weekly loss of 2% as traders figured the looser cap on the Bank of Japan's 10-year yield was a time to buy shorter rates to keep them low."If you're going to put a cap on rates, you're exposing yourself to a lower currency," said Sally Auld, chief investment officer at wealth manager JB Were in Sydney.

"There's also a piece of the story that has to do with the US dollar. Short-term yields are high. The economy is still doing better than people think ... one thing we can be sure of is that we're not going to see a cut any time soon rates." ."

On the stock front, Chinese real estate companies took a fresh beating with developer giant Country Garden falling to a record low after forecasting a $7.6 billion first-half net loss. The broader Hang Seng fell 0.6%.

In commodity markets, European gas prices jumped on the prospect that production could be disrupted by a labor dispute at Australian fields that supply 10% of the world's liquefied natural gas.Australia's labor regulator on Thursday cleared the way for workers to vote on a strike at Chevron.

Brent crude futures looked set to end the week steady at $86.27 a barrel. Data on UK growth and US consumer confidence will be released later on Friday.(Reporting by Tom Westbrook; Editing by Muralikumar Anantharaman & Shri Navaratnam)

The Asian stock markets faced a significant setback today, plunging to a one-month low as the latest US Consumer Price Index (CPI) report failed to inspire investor confidence. This sudden dip has sent ripples across the region's financial landscape, triggering concerns about the global economic recovery. In this article, we'll delve into the details of this market development and explore the key factors driving this decline.

The US Consumer Price Index, a critical economic indicator, measures inflation and serves as a barometer for the country's economic health. Expectations were high for this month's CPI data, with investors hoping for signs of stability and robust growth. However, the report fell short of these expectations, leading to a less-than-enthusiastic response in the stock markets across Asia.

As the US CPI numbers came in below projections, Asia's stock markets experienced a rapid downward spiral. Major indices, such as the Nikkei in Japan, the Hang Seng in Hong Kong, and the Shanghai Composite in China, all registered significant losses. Investor sentiment took a hit as concerns about the global economic recovery deepened, driving traders to reevaluate their portfolios and risk exposure.

Several factors contributed to the intensified decline in Asia's stock markets. The disappointment stemming from the US CPI report was compounded by ongoing concerns about the Delta variant's impact on economic reopening and supply chain disruptions. Additionally, geopolitical tensions and uncertainties added to the market jitters, prompting investors to seek safer assets, such as government bonds, and leading to a sell-off in equities.

While the current market conditions are undoubtedly challenging, it's essential to keep a long-term perspective. The global economic recovery remains a complex process, influenced by various interconnected factors. Investors should closely monitor upcoming economic data releases, central bank decisions, and developments in the ongoing pandemic situation. By staying informed and adaptable, market participants can navigate these turbulent times more effectively.

The recent drop in Asia's stock markets to a one-month low due to the underwhelming US CPI report serves as a stark reminder of the fragility of global financial markets. Investors must remain vigilant, keeping a close watch on economic indicators, emerging market trends, and geopolitical developments. By staying informed and making well-informed decisions, investors can better navigate the challenges posed by these uncertain times.