Asian equities remained on edge on Friday, as market participants awaited the release of key US inflation data for fresh clues about the monetary policy outlook.
The US Core Personal Consumption Expenditures index is set for release later today.
Market forecasts point to a 0.2% monthly increase for November.
Any upside surprise in the data could prompt markets to further temper expectations for US policy easing in the coming year.
China’s Shanghai Composite jumped 0.5%, while Hong Kong’s Hang Seng was marginally higher at around 0.16% at the time of writing.
Gains came as the People’s Bank of China maintained its one-year loan prime rate at 3.1% and the five-year rate at 3.6%, defying market expectations for a rate cut.
Hong Kong’s inflation figures are set for release on Friday.
China is also expected to announce its one-year Medium-Term Lending Facility (MLF) rate, drawing attention from markets for signals on its monetary policy stance.
Japan’s Nikkei was trading flat giving up early gains.
The yen traded near a five-month low, fueled by speculation that the Bank of Japan is unlikely to raise rates anytime soon.
During its last policy meeting of the year, the nine-member BOJ board decided to keep its short-term policy rate unchanged at 0.25%.
In South Korea, the Kospi dropped over 1%, with the won hitting its lowest level in more than 15 years.
Australia’s S&P/ASX 200 fell sharply by 1.3%, driven by losses in commodity stocks.
US markets end flat
Following a sharp sell-off on Wednesday after the Fed’s hawkish outlook, US stocks rebounded early on Thursday.
However, the early gains diminished as the session progressed, leaving the major indices nearly flat by market close.
The Dow Jones Industrial Average managed to end its record-breaking ten-day losing streak, inching up 15.37 points, or less than 0.1%, to 42,342.24.
The Nasdaq Composite slipped 19.92 points, or 0.1%, to 19,372.77, and the S&P 500 edged lower by 5.08 points, or 0.1%, to 5,867.08.
The early strength was attributed to bargain-hunting, with traders looking to capitalise on Wednesday’s steep losses, which pushed the Dow to its lowest closing level in over a month.
The Fed’s hawkish tone for the monetary policy next year has kept investors cautious.
Largely positive US economic data, including stronger-than-expected initial jobless claims, an eight-month high in existing home sales, and an upward revision in Q3 GDP growth to 3.1% from 2.8%, reinforced the Fed’s cautious stance on further rate cuts.
A pullback in 10-year yields below the 4.50% level may be essential to ease near-term market pressures.
The upcoming US Personal Consumption Expenditures data is expected to be a critical factor in determining the direction of yields, influencing investor sentiment and policy expectations.
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