Tech stocks drag US indexes lower as tariff talk clouds markets
There will be no Morning Bid on Thursday due to the U.S. Thanksgiving holiday.
By Lewis Krauskopf
Nov 28 (Reuters) -A look at the day ahead in Asian markets.
Investors were grappling with fresh U.S. inflation data and its implications for Federal Reserve policy along with continued fallout from Donald Trump's tariff pledges as trading in the U.S. was thinning out ahead of the Thanksgiving holiday.
Asian markets were waking up to a tepid day for U.S. equities, with technology shares leading major indexes lower. Shares of Dell DELL.N and HP HPQ.N sank after weak forecasts from the personal computer makers, weighing on the tech sector .SPLRCT.
Data showed the personal consumption expenditures (PCE) price index -- an inflation gauge followed by the Fed -- rose 2.3% in the 12 months through October, a slight uptick from the prior month.
Traders were still expecting another interest rate cut when the Fed meets in mid-December, with Fed futures showing that expectations of a 25 basis point reduction remained intact following the PCE data.
Investors were trying to sort through the potential fallout from Trump's pledge earlier this week of big tariffs on Canada, Mexico and China, which has rattled assets including currencies and auto shares.
For example, Goldman Sachs economists estimated the tariffs, if implemented, would increase U.S. core PCE inflation by 0.9%. Meanwhile, Mexico's president warned the country would retaliate if Trump followed through with his 25% across-the-board tariff, a move her government warned could kill 400,000 U.S. jobs.
With tariffs as a continued specter, major Asian indexes posted mixed sessions on Wednesday.
Japan's Nikkei .N225 ended lower, with automakers leading the losses, amid concerns about the impact of Trump's tariff plans and a stronger yen.
But key China equity gauges gained more than 1%, as data showed a less sharp decline in the country's industrial profits and traders bet that Beijing will provide stimulus to counter risks from the U.S. tariffs.
In India, a Reuters poll of equity analysts found that equity markets will take time to recover from their recent sell-off because they remain overvalued, with last week's Adani indictments only adding to the pain.
Beyond the U.S., central bank policy was in focus elsewhere globally. New Zealand's central bank cut rates on Wednesday for a third time in four months, and flagged more substantial easing.
The Bank of Korea is up next. The BOK is expected to keep its key policy rate at 3.25% on Thursday to support the Korean won KRW= against a strong U.S. dollar, according to a Reuters poll of economists, who forecast at least three rate cuts next year.
The end of the week is expected to bring more eventful data in Asia, with GDP figures due in India and Taiwan on Friday, along with Tokyo CPI data.
"Black Friday" -- the day after Thanksgiving -- also marks the unofficial start of U.S. holiday shopping season. The extent to which inflation-challenged shoppers flock to deals will be of interest to markets, with consumer spending making up more than two-thirds of U.S. economic activity.
Here are key developments that could provide more direction to markets on Thursday:
- Bank of Korea monetary policy meeting
- Australia capex data (Q3)
- Germany CPI (Nov)
Inflation gauges https://reut.rs/4fOUhIe
Trump's trade tariff threats https://reut.rs/4g9WBcx
Reporting by Lewis Krauskopf
Editing by Bill Berkrot
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
