Growth woes, inflation hurt mood in Asia shares, currencies

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Emerging Asian stocks and currencies were

broadly mixed on Wednesday, with sustained strength in the

dollar, higher Treasury yields and inflation worries denting

risk appetite.

Global inflation concerns flared anew after data showed

euro-area consumer inflation soaring to a record.

“The data will seem to translate into greater pressure for

the ECB (European Central Bank) to tighten by a larger 50

basis-point hike in July’s meeting,” Yeap Jun Rong, market

strategist at IG, said.

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The greenback rose 0.2%, pressuring currencies in Asia.

Leading losses were Taiwan’s dollar and China’s yuan

, down 0.4% each.

Singapore’s dollar fell 0.3%, followed by the Thai

baht that slipped 0.2%.

In contrast, the Indian rupee, the only gainer

among currencies, was 0.1% firmer.

India’s economic growth slowed to the lowest in a year in

the first three months of 2022, data showed on Tuesday.

Analysts at Nomura said “we believe the current

recovery is unsustainable, owing to higher inflation, tighter

monetary policy and global growth slowdown.”

Oil prices rose in early Asian trade after European Union

leaders agreed to a partial and phased ban on Russian oil and

China ended its COVID-19 lockdown in Shanghai.

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“Higher energy prices are a massive headache for central

banks worrying about inflation expectations … and EM (emerging

markets) investors are weighing the impact on current account

and fiscal balances of oil-importing economies,” Stephen Innes,

managing partner with SPI Asset Management, said.

Meanwhile, on the radar for Asian investors was a private

sector survey on Wednesday that showed China’s factory activity

shrank less sharply in May as COVID-19 curbs eased and some

production resumed.

Innes said if China continues to increase stimulus support

for its economy, “it will create an organic bounce once we do

have a more broader reopening in China,” but warned that

uncertainty from COVID-19-related restrictions remained.

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Equity markets were mixed. Stocks in Malaysia and

the Philippines slipped 0.7% and 0.6%, respectively, with

Thailand posting a 0.3% drop.

Singapore and Indian stocks were the sole

gainers in the region, up 0.6% and 0.2%, respectively.

Trading was thin in Asia on account of market closures in

South Korea and Indonesia due to public holidays. Investor focus

will largely be on U.S. jobs and unemployment data later this

week.

HIGHLIGHTS:

** Singapore’s 5-year benchmark yield is up 1.70 basis points

at 2.506%

** Top gainers on the Straits Times index: Hongkong Land

Holdings up 3.88%, Yangzijiang Shipbuilding Holdings

up 2.16%, Genting Singapore up 1.92%

Asia stock indexes and

currencies at 0502 GMT

COUNTRY FX RIC FX FX INDE STOCKS STOCKS

DAILY % YTD % X DAILY YTD %

%

Japan -0.41 -10.9 <.n2>

China EC>

India +0.11 -4.16 <.ns ei>

Indonesi 0.00 -2.26 <.jk a se>

Malaysia -0.22 -5.07 <.kl se>

Philippi -0.02 -2.78 <.ps nes i>

S.Korea 11>

Singapor -0.28 -1.76 <.st e i>

Taiwan -0.37 -5.08 <.tw ii>

Thailand -0.19 -2.84 <.se ti>

(Reporting by Savyata Mishra in Bengaluru)