Asian Shares Follow Wall Street Lower Amid Fed Uncertainty

Asian stocks followed Wall Street lower on Monday after a measure of U.S. consumer sentiment exceeded expectations in December and producer price data for November indicated that inflation is stickier than most assume, complicating the Fed’s task to slow the pace of its rapid interest-rate hikes.

The dollar traded higher as investors looked ahead to interest-rate decisions from the U.S. Federal Reserve, the European Central Bank and the Bank of England.

The U.S. consumer inflation report for November is due on Tuesday, which may indicate inflation is sticky and interest rates may have to stay higher for longer.

Treasury yields held largely steady today after rallying from the lowest levels in three months on Friday.

Gold traded below $1,800 per ounce, while Brent crude futures extended declines in Asian trade after falling about 11 percent in the previous week on worries about fuel demand.

China’s Shanghai Composite index dropped half a percent despite daily COVID cases falling slightly. Hong Kong’s Hang Seng index was down 1.4 percent, leading losses in the region.

Japan’s Nikkei average slipped 0.3 percent, tracking losses in the U.S. index futures ahead of the Fed policy meet this week. South Korea’s Kospi average fell 0.6 percent.

Australia’s benchmark S&P/ASX 200 dropped 0.7 percent, dragged down by utilities following the federal government’s intervention in the gas market.

Across the Tasman, New Zealand’s benchmark NZX-50 index was down 0.6 percent.

U.S. stocks fell on Friday and Treasury yields rose amid uncertainty over the Fed policy outlook. The Dow dropped 0.9 percent, while the tech-heavy Nasdaq Composite and the S&P 500 both shed around 0.7 percent.

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