PremiumIndian indices may witness a flat to negative start on Wednesday. In the last trading session on Tuesday, the indices finished sharply higher after tracking positive trends in the Asian market. Despite positive trends, investors remain wary of rising inflation, weak economic growth, crude prices, and Ukraine war. However, the Wall Street investors shrugged off some of these concerns in the overnight session as the indices closed sharply higher after strong retail sales in April eased worries about slowing economic growth. The indices were also lifted by Apple, Tesla, and other megacap growth stocks. The optimism was, however, not shared by all in Asia. Shares rose in Japan and Australia, while it wavered in South Korea, Shanghai, and Hong Kong.
Tata Consumer Products Ltd., the food and beverage arm of the $103 billion Indian conglomerate, wants to go on an acquisition spree to bolster its position in the country’s competitive consumer goods sector, and is in discussions to buy up to five brands.
Asia's stockmarkets struggled to carry recent gains into a fourth straight session on Wednesday and the U.S. dollar steadied, as nagging doubts about inflation and the drag from rate rises crept back in to the global growth outlook.
MSCI's broadest index of Asia-Pacific shares outside Japan gave up earlier gains to trade around flat by mid-morning. Japan's Nikkei rose 0.3% although miners did help Australian shares up about 0.7%.
Overnight Wall Street indexes had jumped and the dollar recoiled from near two-decade highs as investors pushed worry about inflation and recession to the back of their minds.
Japan's economy shrank for the first time in two quarters in the first three months of the year as COVID-19 curbs hit the service sector and surging commodity prices created new pressures, raising concerns about a protracted downturn.
The decline presents a challenge to Prime Minister Fumio Kishida's drive to achieve growth and wealth distribution under his "new capitalism" agenda, stoking fears of stagflation - a mix of tepid growth and rising inflation.
Japan's Nikkei rose on Wednesday to its highest in nearly two weeks, with technology heavyweights leading the rally, after Wall Street closed sharply higher overnight on strong retail sales data.
The Nikkei share average was up 0.6% at 26,807.30, as of 0141 GMT, after hitting its highest since May 6 at 27,053. The broader Topix gained 0.54% to 1,876.84.
Wall Street finished sharply higher overnight, lifted by Apple, Tesla and other megacap growth stocks, after strong April retail sales data eased worries about slowing economic growth.
US consumers continued to increase spending in April, remaining resilient in the face of accelerating inflation, but retail giant Walmart still saw a big hit to its bottom line due to rising costs, according to reports released Tuesday.
Home Depot, however, benefitted from the ongoing spending spree, reporting higher profits and a better outlook for the year.
The reports come amid rising fears of recession in the wake of a 40-year peak in inflation that has prompted the Federal Reserve to raise borrowing costs aggressively to cool the economy and tamp down price pressures.
Netflix on Tuesday said it laid off about two percent of its staff in a belt-tightening move after growth slowed at the once-booming streaming television service.
"These changes are primarily driven by business needs rather than individual performance, which makes them especially tough, as none of us want to say goodbye to such great colleagues," a spokesperson told AFP.
About 150 employees have been laid off, most of them in the United States, the spokesperson said, adding that Netflix also cut spending on contractors.
Overnight surges left the euro and pound sitting pretty in early Asia helped by good U.K. jobs data and a general improvement in investor sentiment on solid U.S. retail sales and hopes of easing lockdowns in China.
The European common currency touched $1.0563 in early Asia trade, after rising 1.1% overnight, its largest day of percentage gains since March.
Sterling touched $1.2501 after a 1.4% overnight rally, its best day since late 2020, also helped by data that showed Britain's jobless rate hit a 48-year low.
These gains pushed the dollar index, which measures the greenback against six peers, as low as 103.18 in early Asia, its lowest in nearly two weeks.
A rally in stocks cooled in Asia on Wednesday while Treasuries edged up as investors weighed the latest China figures as well as hawkish comments from Federal Reserve Chair Jerome Powell.
Shares rose in Japan but fell in China and Hong Kong. MSCI Inc.’s Asia-Pacific stock index remained higher for a fourth day, the longest streak since February. US futures dipped after the S&P 500 added 2% in a risk rebound.
Chinese data showed home prices fell for an eighth month as steps to counter a real-estate downturn failed to revive confidence amid Covid outbreaks.
Treasuries pared a slide from Tuesday, leaving the US 10-year yield at 2.97%. Bonds were pressured overnight after Powell said the Fed “won’t hesitate" to tighten policy beyond neutral to curb inflation. A gauge of the dollar steadied.
Crude oil was trading around $113 a barrel. Cryptocurrencies extended a period of relative calm, with Bitcoin hovering around $30,300.
Investor sentiment improved a little on robust US retail sales and factory output data, as well as stronger-than-expected euro-area expansion. The worry is that tougher times lie ahead as monetary settings tighten, Russia continues the war in Ukraine and China grapples with Covid.
Chicago Federal Reserve Bank President Charles Evans on Tuesday said he supports moving to a shallower rate-hike path by July or September to allow the Fed time to assess inflation and the job market as it pushes borrowing costs up to neutral, and likely beyond.
"I think front-loading is important to speed up the necessary tightening of financial conditions, as well as for demonstrating our commitment to restrain inflation, thus helping to keep inflationary expectations in check," Evans told the Money Marketeers in New York, noting that inflation is "much too high."
The Fed has raised interest rates by three-quarters of a percentage point so far this year, including a bigger-than-usual half-point hike earlier this month that lifted short-term borrowing costs to a range of 0.75%-1%.
Federal Reserve Chair Jerome Powell, in his most hawkish remarks to date, said the US central bank will keep raising interest rates until there is “clear and convincing" evidence that inflation is in retreat.
“What we need to see is inflation coming down in a clear and convincing way, and we’re going to keep pushing until we see that," Powell said Tuesday during a Wall Street Journal live event. “If that involves moving past broadly understood levels of ‘neutral,’ we won’t hesitate at all to do that."
The Fed chair repeatedly stressed the need to curb the hottest inflation in decades during the roughly 35-minute interview, calling price stability “the bedrock of the economy" and acknowledging that some pain in achieving this -- including a slight rise in the unemployment rate -- was a cost worth paying in order to achieve it.
Global equity markets rallied and Treasury yields rose on Tuesday, as solid U.S. retail sales in April suggested economic growth might strengthen, as did an easing of China's lockdowns to contain the COVID-19 pandemic.
U.S. retail sales rose 0.9% last month while data for March was revised higher to show sales advancing 1.4% instead of 0.7% as previously reported, the Commerce Department said.
The data show U.S. consumers weathering inflationary headwinds as sales gained for the fourth consecutive month, said Jeffrey Roach, chief economist for LPL Financial. Sales are nominal, so much of the increase is from higher prices, he said.
"We expect a rebound in economic growth in Q2," Roach said in an email, if prices moderate enough to relieve some of the pressure on consumers.
U.S. and European stocks rallied following gains overnight in Asia. MSCI's gauge of stocks across the globe closed up 2.0%. The pan-European STOXX 600 index rose 1.22%.
On Wall Street, the Dow Jones Industrial Average rose 1.28%, the S&P 500 gained 1.89% and the Nasdaq Composite advanced 2.57%. Growth stocks rose 2.48% while value shares gained 1.60%.
The gains were a rebound from overselling last week, said Anthony Saglimbene, global market strategist at Ameriprise Financial, citing the sixth straight weekly loss for the Nasdaq and S&P 500.
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