SINGAPORE – Asian stocks inched lower on Thursday, while the dollar clung to overnight gains in cautious trading as US Federal Reserve policymakers reiterated their commitment to reining in inflation despite signs of mounting economic headwinds.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.16 percent lower, set for third straight day of losses. Japan’s Nikkei was up 0.27 percent, while Australia’s S&P/ASX 200 index was 0.13 percent higher.
Futures indicated Europe was set for muted open, with Eurostoxx 50 futures up 0.09 percent, German DAX futures down 0.02 percent and FTSE futures 0.04 percent higher.
E-mini futures for the S&P 500 fell 0.18 percent, while Nasdaq futures slid 0.33 percent. Shares of Tesla Inc. slid 6 percent in after-hours trading after the electric vehicle maker posted its lowest quarterly gross margin in two years.
Elon Musk doubled down on the price war he started at the end of last year, saying Tesla would prioritize sales growth ahead of profit margins in a weak economy.
Traders are bracing for meetings from central banks in the next few weeks as easing worries over the banking sector brings inflation and monetary policy back into focus.
“Global central banks’ narrow focus on combating inflation has gotten more complicated as they are now faced with the added task of maintaining financial stability,” said Thomas Poullaouec, head of multi-asset solutions APAC at T. Rowe Price.
A Reuters poll of economists showed the Fed is likely to deliver a final 25-basis-point rate increase in May and then hold rates steady for the rest of the year. Markets are pricing in an 83 percent chance of the Fed hiking by 25 basis points, CME FedWatch tool showed.
The hawkish rhetoric from Fed speakers continued with Federal Reserve Bank of New York President John Williams saying that the inflation rate is still at problematic levels and that the US central bank will act to lower it.
More Fed speakers are scheduled to give commentary over the rest of the week, before the officials enter a blackout period on April 22 ahead of the central bank’s May 2-3 meeting.
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