In Asian Equity Markets stocks were down to their lowest in seven weeks on Wednesday as rising commodity prices and growing inflationary pressure in the United States prompted markets to bet on earlier rate hikes and higher bond yields globally. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.5 percent, adding to Tuesday’s 1.6 percent loss with all major indices under heavy selling pressure. Australian stocks fell 0.6 percent while South Korea’s KOSPI index lost 0.7 percent. Japan’s Nikkei reversed early gains to be down 0.4 percent.
In Currency Markets the U.S. dollar hovered near its lowest levels of the year on Wednesday as traders hung on to bets that the Federal Reserve would remain steadfast in its easy policy settings ahead of data expected to show a sharp rise in annual U.S. inflation. The dollar touched its weakest in two months against the euro overnight, following a strong European growth survey, and it traded just above that level at $1.2140 early in Asia. The yen fell marginally to 108.79 per dollar. Sterling hung on to recent gains to trade at $1.4118.
In US Equity Markets stocks closed lower on Tuesday as rising commodity prices and labor shortages fed fears that despite reassurances from the U.S. Federal Reserve, near-term price spikes could translate into longer-term inflation. The Dow fell 1.36 percent, to 34,269.16, the S&P 500 lost 0.87 percent, to 4,152.1 and the Nasdaq Composite was down 0.09 percent, to 13,389.43. Of the 11 major sectors in the S&P 500, only materials ended the session green. Energy suffered the largest percentage loss, closing down 2.6 percent. Boeing Co lost 1.7 percent after the plane maker announced deliveries of its 737 MAX fell to just four planes in April due to an electrical problem.
In Commodities Markets oil prices were lifted by fears of a gasoline shortage on Tuesday after a cyber attack caused an outage at the largest U.S. fuel pipeline system. U.S. crude gained 17 cents to $65.45 a barrel. Brent crude added 15 cents to $68.70 per barrel. Tuesday’s U.S. crude oil supply data from the American Petroleum Institute showed a draw of 2.533 barrels for the week ending May 7. Spot gold was off at $1,829.9 an ounce. Silver fell 0.6 percent to $27.47 per ounce, while platinum lost 0.5 percent to $1,228.68. Palladium rose 0.2 percent to $2,942.67 per ounce.
In European Equity Markets stocks fell from all-time highs on Tuesday, with the travel, retail and technology sectors among the top losers after global sentiment turned risk-averse on worries about rising inflation in the United States. The pan-European STOXX 600 index fell 2.0 percent. The main bourses in Frankfurt, Paris and London all lost more than 2 percent. European technology shares fell 2 percent to their lowest in six weeks, while mining firms handed back some of the strong gains notched up in the previous session. Travel and leisure stocks lost 5.7 percent overall.
In Bond Markets U.S. Treasury yields climbed on Tuesday as inflation concerns helped drive a sell-off in equity markets while investors girded for a closely watched reading on consumer prices on Wednesday. Yields on longer-dated Treasuries were up for a third straight day, with the yield on 10-year Treasury note up 2.1 basis points at 1.624 percent. The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) was last at 2.695 percent, after closing at 2.717 percent on Monday. The yield on 30-year Treasury bond was up 3.5 basis points at 2.354 percent.