Asian stocks fell Wednesday after data showing the largest spike in US inflation in 13 years raised some market expectations that the Federal Reserve could end pandemic-era stimulation sooner than previously thought.

But US bond yields and the dollar were lower in Asian trading after rising on inflation data the day before.

The US consumer price index rose 0.9 percent in June, the Department of Labor said on Tuesday with. That was above market expectations and the biggest increase since June 2008.

“Against the backdrop of higher, longer-term US inflation, earlier taper seems the most likely direction of policy,” said Rob Carnell, ING chief research officer for the Asia Pacific.

“The only thing that comes off as a bit of relief from all of this is that nobody seems to be expecting much in terms of Fed rates. So we may get there sooner, but we’re not getting much . “

The Reserve Bank of New Zealand (RBNZ) was the last central bank to end its pandemic-era policy on Wednesday as it surprised the markets by announcing that it would start its bond-buying program starting next week which drove the kiwi dollar soaring.

MSCI’s broadest index for Asia-Pacific stocks outside of Japan fell 0.33 percent, while Chinese blue chips were down 1 percent and Hong Kong’s Hang Seng was down 0 , 66 percent t and Seoul’s Kospi lost 0.29 percent.

Investors are closely monitoring Fed chairman Jerome Powell’s semi-annual testimony to Congress on Wednesday and Thursday for more clues as to whether the Fed will take more aggressive steps to deal stop rising inflation. Powell’s testimony comes as the Biden administration continues to push for fiscal stimulus to stimulate the US economy.

The Senate Budget Committee Democrats reached an agreement late Tuesday on a $ 3.5 trillion infrastructure investment plan US dollar, which they plan to include in a budget decision to be debated later this summer.

In Asia, China will publish second-quarter economic growth data on Thursday, although its central bank will lower bank reserve requirements to support an unbalanced economic recovery.

China’s prime minister said Tuesday that the country would keep its economic activity on a reasonable level for the next 18 months and take “comprehensive measures” to ease rising commodity prices. </ On Wall Street overnight, stocks took the CPI data calmly and offered technology stocks that normally thrive on low interest rates, but the major indices ended up closing lower.

The Dow Jones Industrial Average was down 0.31 percent to 34,888.79, the S&P 500 was down 0.35 percent to 4,369.21 and the Nasdaq Composite lost 0.38 percent to 14,677.65.

A $ 24 billion auction of 30-year government bonds reflected investor nervousness when they were sold at 2.00 percent yield, more than two basis points above what the bonds were trading before the auction.

The 30-year yield fell from a closing price of 2.037 percent to 2.0302 percent, while the 10-year benchmark yield fell from a closing price slipped from 1.415 percent on Tuesday to 1.3998 percent.

The policy-sensitive two-year return was 0.2508 percent after a closing price of 0.255 percent.

On the foreign exchange market, the safe haven yen appreciated, with the dollar against the Japanese E unit fell by 0.13 percent to 110.47. The euro rose 0.08 percent to $ 1.1783 after the greenback had previously hit a three-month high against the single currency.

The dollar index, which tracks the greenback against a basket of currencies from other major trading partners, fell to 92.747, after previously rising to 92.832 – just below the 92.844 level last week for the first time since April 5th.

The New Zealand dollar was 0.85 percent higher after the RBNZ closed who announced security purchases.

Oil prices stabilized after data showed that China’s crude oil imports fell 3 percent year over year from January to June. They rose more than 2 percent on Tuesday after the International Energy Agency said the market should expect tighter supply due to disagreement among the major manufacturers.

US crude oil fell 0.24 percent to US 75.07 -Dollars per barrel and the global benchmark for Brent crude oil fell 0.16 percent to $ 76.37 per barrel.

(This story was not edited by NDTV staff and is automatically generated from a syndicated feed .)

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