By Zhang Mengying
Investing.com – Asia Pacific stocks were down on Monday morning following a surprise U.S. inflation data that raised the possibility of an intensified monetary tightening from the U.S. Federal Reserve.
Japan’s Nikkei 225 fell 2.57% by 10:46 PM ET (2:46 AM GMT).
South Korea’s KOSPI fell 2.77%.
Hong Kong’s Hang Seng Index was down 2.63%.
Investors are also concerned about the resume of stringent COVID-19 curbs in China could hurt the global economy and supply chains. Beijing’s most populous district of Chaoyang announced on Sunday three rounds of mass testing as it saw clusters of COVID-19 outbreaks.
Australian markets are closed for a holiday.
The U.S. consumer price index released Friday rose 8.6% in May year-on-year, a fresh 40-year high, adding to investors' concerns about a recession caused by tightening monetary policies.
Shorter-dated Treasury yields surged, and 30-year Treasuries are below those on five-year notes, over the recession fears.
Many investors now expect half-point interest rate hikes this week and in July and September, while some investors bet on an even bigger 75-basis-point move is possible at the Federal Reserve’s June meeting.
“The inflation data are game-changers that force the Fed to switch to a higher gear, front-loading policy tightening,” Jefferies strategist Aneta Markowska said in a note, lifting a call for this week’s decision to a 75-basis point hike.
“Inflation isn’t peaking, it isn't even plateauing. It is still accelerating, and it will likely do so in June” as well, the note added.
On the data front, U.S. PPI is due on Tuesday, and China's key economic activity data including industrial production is due the day following.
The Bank of England will hand down its policy decision on Thursday, while the Band of Japan will hand it down on Friday.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.