Asian shares fell on Wednesday, tracking overnight losses on Wall Street, as cautious remarks from U.S. Federal Reserve Chair Jerome Powell and weak economic data fueled concerns over slowing global growth.
MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.4% in mid-morning trade, while Japan’s Nikkei dropped 0.5% after a private survey showed manufacturing activity contracted at the fastest pace in six months due to falling new orders.
Australian shares led regional losses, sliding 1% after a bigger-than-expected jump in August consumer prices dampened hopes of further domestic policy easing.
In the U.S., the S&P 500 shed 0.6% on Tuesday, its sharpest one-day fall in three weeks, while futures were flat in early Asian trading.
Powell warned that near-term risks to inflation remain tilted to the upside, while employment risks are skewed to the downside, comments that analysts said underscore the Fed’s balancing act as it weighs another interest rate cut.
Markets are still betting heavily on easing, with Fed funds futures pricing in a 93% chance of a rate cut at the central bank’s October meeting, up from nearly 90% the day before. Treasury yields fell, with the benchmark 10-year yield easing to 4.1061%, while the two-year yield dipped to 3.5673%.
U.S. PMI data released Tuesday added to the cautious mood, showing business activity slowed for a second consecutive month in September. Analysts at Citi noted that the composite output prices index fell to its lowest since April, suggesting firms are struggling to pass on higher costs amid weak demand and rising competition.
In commodities, Brent crude gained 0.4% to $67.87 per barrel after a deal to resume oil exports from Iraq’s Kurdistan stalled, easing concerns about potential oversupply. Spot gold edged down 0.2% to $3,757.49 per ounce after touching a record high on Tuesday.
Despite Wednesday’s pullback, Asian equities remain on track for their best monthly performance in a year, buoyed by earlier gains in technology stocks, a softer dollar, and expectations of a renewed Fed easing cycle.
Source: Reuters
Written By Rodney Mbua
