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Asian Stocks Mixed, Peak-Inflation Debate Continues

Clayton Lee

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(C) Reuters.

By Gina Lee

Investing.com – Asia Pacific stocks were mixed on Thursday morning, while U.S. equity futures were on an upward trend, as a continuous debate around whether inflation is peaking saw a rally in U.S. Treasuries.

Japan’s Nikkei 225 jumped 1.16% by 10:02 PM ET (2:02 AM GMT) and South Korea’s KOSPI gained 0.61%.

In Australia, the ASX 200 edged up 0.19%, while Hong Kong’s Hang Seng Index was down 0.40%.

China’s Shanghai Composite edged down 0.11% and the Shenzhen Component was down 0.21%, with investors continuing to assess the likelihood of further policy support. The Nasdaq Golden Dragon China Index of Chinese shares traded in the U.S. dropped almost 5%.

S&P 500 and Nasdaq 100 futures were up, boosted by positive earnings from Tesla Inc. (NASDAQ:TSLA) and United Airlines Holdings Inc. (NASDAQ:UAL)

Rate markets also saw a sharp repricing, with long U.S. bond yields dropping as investors including the Bank of America (NYSE:BAC) and Nomura Asset Management touted a buying opportunity after the recent rout. Ten-year yields continued to fall, with healthy demand at a 20-year bond auction adding fuel to the rally.

The debate as to whether inflation is peaking continues but is unlikely to deter central banks from tightening monetary policy, with commodity shortages due to the war in Ukraine keeping prices elevated.

A case in point, New Zealand’s consumer price index (CPI), which grew at the fastest pace in 32 years. The CPI grew 6.9% year-on-year and 1.8% quarter-on-quarter in the first quarter of 2022.

Meanwhile, U.S. 10-year real yields briefly turned positive on Wednesday for the first time since March 2020. Increasing bets on aggressive Fed interest rate hikes are also sounding warnings for risk assets.

“There are still some risks right now,” abrdn multi-asset solutions investment director, Asia Pacific, Ray Sharma-Ong told Bloomberg.

“It’s not over. We do still see some risk of 10-year yields pushing higher on the back of this uncertainty,” as investors await details on the Fed’s timeline for shrinking its balance sheet, he added.

The U.S. economy grew at a moderate pace through mid-April 2022, but rising prices and geopolitical developments created uncertainty and clouded the outlook for future growth, according to the Fed’s Beige Book released on Wednesday.

“Strong demand allowed firms to pass through input cost increases in consumers,” Commonwealth Bank Of Australia strategist Carol Kong said in a note.

“The anecdotal evidence supports our view the Fed is well behind the curve and needs to tighten policy aggressively.”

Investors now await comments from Fed Chairman Jerome Powell and European Central Bank President Christine Lagarde at an International Monetary Fund event later in the day. Bank of England Governor Andrew Bailey will follow a day later.

On the data front, the eurozone CPI is due later in the day. The eurozone, French, German, and British manufacturing purchasing managers indexes are due to follow on Friday.

Asian Stocks Mixed, Peak-Inflation Debate Continues

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U.S. Senate Committee Backs Biden Nominee to Be Ukraine Ambassador

Clayton Lee

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(C) Reuters. FILE PHOTO: Bridget Brink, nominated to be U.S. ambassador to Ukraine, testifies at her Senate Foreign Relations Committee confirmation hearing at the U.S. Capitol in Washington, U.S., May 10, 2022. REUTERS/Kevin Lamarque/File Photo

WASHINGTON (Reuters) – The U.S. Senate Foreign Relations Committee on Wednesday unanimously approved U.S. President Joe Biden’s nominee to be the next ambassador to Ukraine, veteran diplomat Bridget Brink, and planned to push for her quick confirmation by the full Senate.

Brink is expected to easily win confirmation to a crucial position that has been vacant for three years.

The committee held Brink’s confirmation hearing on May 10, just two weeks after Biden sent her name to the Senate. The quick action underscored the desire from both Biden’s Democrats and Republicans to send an ambassador to support Ukrainian President Volodymyr Zelenskiy as he faces Russia’s invasion.

The Senate is expected later this week to approve nearly $40 billion in military and humanitarian support for Kyiv.

A Michigan native who speaks Russian, Brink is currently U.S. ambassador to Slovakia. She has been a career diplomat for 25 years and has worked in Uzbekistan and Georgia as well as in several senior positions across the State Department and White House National Security Council.

Brink was confirmed by unanimous voice vote in 2019, when former Republican President Donald Trump nominated her for the position in Bratislava.

U.S. Senate committee backs Biden nominee to be Ukraine ambassador

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Japan’s Trade Gap Widens As Import Costs Surge on Supply Pressures

Clayton Lee

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(C) Reuters. FILE PHOTO: A cargo ship and containers are seen at an industrial port in Tokyo, Japan, February 15, 2022. REUTERS/Kim Kyung-Hoon

By Tetsushi Kajimoto and Daniel Leussink

TOKYO (Reuters) – Japan’s exports logged a third straight month of double-digit gains in April led by U.S. demand, but surging global commodity costs inflated the country’s import bill to a record, adding to worries about the rising cost of living.

Shoring up the prospects of a private demand-led recovery, however, was a gauge of capital expenditure that posted its first monthly gain in three months.

The mixed data on Thursday followed the yen’s falls to two-decade lows beyond 131 to the dollar earlier in May, which stoked fears of worsening terms of trade and added financial burdens for the resource-poor Japanese economy as import costs soar.

A weak yen, once considered a boon to the export-led economy, is now having less of an impact as shipments grow smaller, given the ongoing shift by Japanese manufacturers to offshore production.

Japan’s exports rose 12.5% in April from a year earlier, Ministry of Finance data showed, led by U.S.-bound shipments of cars and undershooting a 13.8% increase expected by economists in a Reuters poll. It followed a 14.7% rise in March.

Imports rose 28.2% in the year to April, versus the median estimate for a 35.0% increase, as a weaker yen helped boost already surging global commodity prices.

That resulted in a trade deficit of 839.2 billion yen ($6.54 billion), narrower than the median estimate for a 1.150 trillion yen shortfall but posting a ninth straight month in the red.

Analysts have warned of the risks of prolonged cost-push inflation to the fragile economy with external factors, not domestic demand, pushing import bills higher.

Separate data showed on Thursday Japan’s core machinery orders rose 7.1% in March from the previous month, versus a 3.7% increase expected by economists in a Reuters poll.

The volatile data series, regarded as a leading gauge of capital expenditure in the coming six to nine months, provided a glimmer of hope for a domestic demand-led recovery.

Japan’s economy shrank for the first time in two quarters in the January-March period as COVID-19 curbs hit the service sector and surging commodity prices created new pressures.

($1 = 128.3600 yen)

Japan’s trade gap widens as import costs surge on supply pressures

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Barclays Appoints Hossein Zaimi As Asia Pacific Markets Head

Clayton Lee

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(C) Reuters. FILE PHOTO: A branch of Barclays Bank is seen, in London, Britain, February 23, 2022. REUTERS/Peter Nicholls

HONG KONG (Reuters) – Barclays (LON:BARC) said on Thursday Hossein Zaimi had been appointed as its head of markets for Asia Pacific and would join the bank after a long career at rival HSBC

Zaimi will remain based in Hong Kong and report to Adeel Khan and Stephen Dainton, co-heads of Barclays global markets business and Jaideep Khanna, the bank’s head of Asia Pacific, a statement said.

Zaimi spent more than 17 years at HSBC and was most recently the global head of equities and global co-head of securities financing.

Barclays appoints Hossein Zaimi as Asia Pacific markets head

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