Asian Markets Fall as US Inflation Data Looms; Bitcoin Surges

Asian Markets Fall as US Inflation Data Looms; Bitcoin Surges

Asian stocks followed Wall Street lower on Thursday, as investors awaited a key inflation report from the US that could influence the Federal Reserve’s interest rate decisions. Meanwhile, bitcoin soared to a new record high above $63,000.

The MSCI Asia Pacific Index fell 0.4%, with Japan’s Nikkei 225 dropping 1.1% as it reopened after a holiday. China’s Shanghai Composite and Hong Kong’s Hang Seng both lost 0.6%, while Australia’s S&P/ASX 200 slipped 0.1%. South Korea’s Kospi bucked the trend, rising 0.4%.

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The US core personal consumption expenditures (PCE) price index, the Fed’s preferred measure of inflation, is due later on Thursday. Analysts expect it to show a 0.3% increase in January from a month earlier, and a 1.4% rise from a year ago. The Fed has a 2% inflation target, but has signaled that it will tolerate a temporary overshoot as the economy recovers from the pandemic.

US Futures Slip With Focus on Key Inflation Data: Markets Wrap

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The PCE data could have a significant impact on the bond market, which has been roiled by rising inflation expectations and fears of tighter monetary policy. The yield on the 10-year Treasury note, which moves inversely to prices, climbed to 1.47% on Thursday, after falling four basis points on Wednesday. The yield on the two-year note, which is more sensitive to rate changes, rose to 0.14%, after dropping six basis points on Wednesday.

The bond market turmoil has also weighed on equity valuations, especially for high-growth sectors such as technology. The Nasdaq 100, which is dominated by tech giants, fell 0.9% on Wednesday, while the S&P 500 lost 0.4%. The Dow Jones Industrial Average, which has more exposure to cyclical sectors, gained 0.3%.

In contrast to the stock and bond markets, the cryptocurrency market was in a bullish mood, as bitcoin surged to a new all-time high of $63,729 on Thursday, according to CoinDesk. The rally came ahead of the listing of Coinbase, the largest US cryptocurrency exchange, on the Nasdaq on Wednesday. The listing is seen as a milestone for the mainstream acceptance of digital assets.
Bitcoin has more than doubled in value this year, driven by increased demand from institutional and retail investors, as well as speculation that it could become a global reserve currency. However, the cryptocurrency remains highly volatile and faces regulatory and environmental challenges.

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Source : yahoo finance

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