Asian stocks and euro hold steady ahead of US inflation data

Passers-by wearing protective face masks are reflected on a stock market quotation board, amid the coronavirus disease (COVID-19) pandemic, in Tokyo, Japan January 25, 2022. REUTERS/Issei Kato

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SINGAPORE, Feb 8 (Reuters) – Asian stocks consolidated recent gains as investor confidence improved amid strong U.S. corporate results, helping stocks recover from the worst start to the year since 2016, while the euro’s resurgence stalled ahead of US inflation data.

Markets are still eyeing rate hikes in the euro zone and the United States after the European Central Bank was seen last week as adopting a more hawkish tone.

Eurozone yields rose sharply on Monday as Italian bond prices underperformed their peers. The United States released stronger-than-expected employment and earnings data. Read more

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MSCI’s broadest Asia Pacific ex-Japan equity index (.MIAPJ0000PUS) edged up 0.05% to 614.6 after hitting 617.7, the highest since Jan. 25. The benchmark is now up about 3% from an over-year low of 595.99 on Jan. 27.

“Much of the investor concern centers on the five Fed hikes that markets expect for 2022, and whether they won’t be enough to contain inflation,” said Seema Shah, chief strategist at Principal. Global Investors, in a note.

“Yet, the Fed’s tightening urgency should soon ease as the most acute economic pressures on prices begin to fade. Moreover, while U.S. growth has likely peaked, a recession is not in the cards,” she said.

The Japanese Nikkei (.N225) rose 0.4%, Korean stocks (.KSII) rose 0.7% and Taiwan (.TWII) gained 0.6%. Hong Kong stocks were among the losers, with the Hang Seng Index (.HSI) falling 0.7%.

S&P 500 futures were flat and Nasdaq futures edged up 0.06%.

The MSCI World Index (.MIWD00000PUS) fell 6.2% in January – the worst start to a year since 2016.

US consumer price figures for January are due on Thursday and could show core inflation accelerating at the fastest pace since 1982 to 5.9%.

Wall Street’s major stock indexes were mixed throughout Monday’s session before ending as markets digested mixed quarterly results from megacaps Inc and Facebook owner Meta Platforms (FB.O). Read more

The Dow Jones Industrial Average (.DJI) ended flat, while the S&P 500 (.SPX) lost 0.37% and the Nasdaq Composite (.IXIC) fell 0.6%.

Of the 278 S&P 500 companies that reported earnings on Friday, 78.4% beat analysts’ expectations, according to Refinitiv data.

“Corporate profits are the highest in decades, consumers are buoyed by excess savings and the gradual normalization of the supply chain should give inventory and production a boost,” said Principal’s Shah. Global Investors.

The US payrolls report for January showed on Friday that annual growth in average hourly wages rose to 5.7% from 4.9%, while payrolls in previous months were revised up by 709 000 to radically change the hiring trend.

In currency markets, the euro edged down 0.1%, after jumping 2.7% last week in its best performance since early 2020 on tightening expectations. Read more

The euro held on to gains but was unable to beat resistance around $1.1483 even as European bond yields surged and last bought $1.1441.

The dollar climbed 0.1% against the yen to 115.27 and the US dollar index remained at 95.457. Treasury yields hovered near pandemic highs, with the benchmark 10-year yield rising 1.6 basis points to 1.9358%.

Oil prices fell on Tuesday ahead of talks between U.S. and Iranian officials that could lead to the lifting of U.S. sanctions on Iranian oil sales.

Brent crude was last down 0.4% at $92.29 a barrel after hitting a seven-year high of $94 on Monday.

Spot gold prices held steady at a one-week high of $1,822 an ounce.

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Reporting by Anshuman Daga; Additional reporting by Tom Westbrook. Editing by Gerry Doyle

Our standards: The Thomson Reuters Trust Principles.

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