SYDNEY- Asian shares were ending a rough quarter in a sombre mood on Thursday amid fears central banks’ cure for inflation will end up sickening the global economy, though it is proving to be a fillip for the safe-haven dollar and government bonds.
Policy makers on Wednesday reiterated their commitment to controlling inflation no matter what pain it caused, and data on US core prices later in the session will only underline the extent of the challenge.
“Inflation can be sticky,” warned analysts at ANZ. “It is broadening from goods to services and wage growth is accelerating.”
“Even with rapid rate rises, it will take time for tightness in labor markets to unwind, and that means inflation can stay higher for longer.”
That suggests it is too early to pick a peak for interest rates or a bottom for stocks, even though markets have already fallen a long way.
The S&P 500 has lost almost 16 percent this quarter, its worst performance since the very start of the pandemic, while the Nasdaq is off an eye-watering 21 percent.
Early Thursday, S&P 500 futures and Nasdaq futures were both down 0.3 percent with little sign as yet that the new quarter will bring in brave bargain hunters.
MSCI’s broadest index of Asia-Pacific shares outside Japan eased another 0.4 percent, bringing its losses for the quarter to 10 percent.
Japan’s Nikkei fell 0.8 percent, though its drop this quarter has been a relatively modest 4 percent thanks to a weak yen and the Bank of Japan’s dogged commitment to super-easy policies.
The need for stimulus was underscored by data showing Japanese industrial output dived 7.2 percent in May, when analysts had looked for a dip of only 0.3 percent.
Chinese blue chips added 0.6 percent helped by a survey showing a marked pick up in services activity. – Reuters
