Equites Dipped, Treasuries Rose amid Inflation Concerns

Asian equites tumbled as case for aggressive monetary tightening strengthened after stubborn inflation number takes a toll on economic growth.

Shares in Mainland China, Hong Kong, South Korea, Thailand and Japan dipped. The MSCI Asian Index ex Japan is higher by 0.37%.

The People’s Bank of China is making stabilizing economic growth a top priority and will step up support for weak sectors, Deputy Governor Chen Yulu said.

Contracts on the S&P 500 Index slid 0.7% after the equity gauge slumped Wednesday to the lowest level since March 2021. Nasdaq 100 futures lost 1.1%.

The dollar gained for a sixth day and Treasuries gained amid haven demand. Th U.S. 10-year dropped by 9 basis points.

Higher than expected inflation reading for April raised concerns in the market that Fed would hike rates faster than expected – resorting to three-quarter point move rather than half points to tame down inflation.

“Until we get a meaningful move lower in inflation, not only one print, but a consistent two, three, four prints moving in the right direction, this market may remain range bound,” Mona Mahajan, senior investment strategist at Edward Jones & Co., said on Bloomberg Television.

“We’re seeing the beginning of the capitulation and the great reset, if you want, in pricing,” Virginie Maisonneuve, global chief investment officer for equity at Allianz Global Investors UK, said on Bloomberg Television. “Right now the big question is peak inflation.”

Crude oil dipped with the WTI trading around $104 a barrel and the Brent trading around $106 a barrel.