Asian shares fall ahead of Fed comments

FE Team | Published: February 28, 2024 23:51:50

HONG KONG, Feb 28 (AFP): Asian stocks were mostly lower on Wednesday after the release of lacklustre consumer confidence data, with comments from US Federal Reserve officials and fresh economic figures due later in the day.
Global equities mostly rose Tuesday, despite data showing pessimism among consumers in the United States and Germany.
The Conference Board reported a larger-than-expected drop in US shoppers' confidence in February, as survey participants expressed more concern about the labour market and the American political environment.
In Germany, consumers also remained downbeat about the economy and their propensity to make large purchases was largely unchanged from a month ago, according to pollster GfK.
US stocks ended Tuesday with little change, "as investors remain grounded ahead of critical economic data, including the Federal Reserve preferred inflation gauge, which is expected to shed some light on the timing of the first Fed cut", Stephen Innes, managing partner of SPI Asset Management, said in a note.
Traders will be examining the US Personal Consumption Expenditure (PCE) price index due Thursday, as well as US consumer income and initial jobless claims data released the same day.
Investors will be looking out for comments later Wednesday from three Fed officials, which could offer fresh insights into the US central bank's rate cut outlook.
Expectations on a timeline for cuts to US borrowing costs have gradually shifted to later this year, as inflation data has come in hot and policymakers have indicated they need to see more signs that inflation is moving towards their 2.0 percent goal.
"The rates market has shifted from an anticipated six rate cuts by the Federal Reserve in 2024 to just three, indicating that investors might find themselves on the wrong end of the stick if a top-side beat is big enough to threaten the 3 cut narrative," Innes said.
Adding to the recent chorus of officials, Fed governor Michelle Bowman said she expected inflation to continue declining with rates held at their current level, adding it was too early to begin reducing rates.
Eurozone economic and consumer confidence and US wholesale inventories data are also set for release on Wednesday.
In Asia, Hong Kong and Shanghai were down more than one percent. Sydney, Mumbai, Singapore, Bangkok and Kuala Lumpur were also lower.
Tokyo stocks fell as well.
"While the market veered toward positive territory after the opening, it slipped again with investors worried about high prices," IwaiCosmo Securities said.
Better-than-expected Japanese consumer inflation data released a day earlier stoked speculation among analysts that the Bank of Japan might raise interest rates in April or potentially even next month.
Unlike other major central banks, the BoJ has stuck to an ultra-loose monetary policy, putting pressure on the yen.
Seoul, Wellington, Jakarta and Manila were up.
London opened down, Frankfurt was slightly up and Paris was flat.