Asian Stocks Decline as Markets Await US Inflation & Fed – Asia Market Wrap

The double-whammy of an impending US inflation report and the Federal Reserve decision left traders on edge as Asian equities fell, brushing off Wall Street’s gains.

Prior to Europe’s tariff decision, auto shares led the loss in Hong Kong’s equities index, which plummeted more than 1%. As Indian indexes approached fresh all-time highs, stocks in Japan also experienced a decline. US stock contracts saw minimal movement following the S&P 500’s closing at a record high, helped by an Apple rally.

After climbing on a strong $39 billion selling, Treasuries steadied, reflecting expectations that the Fed will lower rates this year in light of Wednesday’s inflation report. Strong demand resulted in the greatest bid-to-cover ratio since February 2022—2.67%—in an auction of 10-Yr debt. Australian bonds increased somewhat.

In key Asian data, China’s consumer price gains held above zero in May while factory-gate prices remained stuck in deflation, fueling concerns over persistently weak demand.  Separately, more limitations on China’s access to chip technology for artificial intelligence are also something the Biden administration is thinking about implementing.