Asian stocks, FX edge up after US inflation data, Indian rupee slips

BANGKOK: Most Asian currencies and stock indexes edged higher as data overnight showed US inflation rose largely in line with estimates, while the Indian rupee slipped on a sharper-than-expected jump in retail inflation in March.

India’s 10-year bond yield rose to fresh three-year highs as the country’s inflation surged 6.95% to its highest in 17 months. The rupee fell 0.1%. The South Korean won gained the most among the region’s currencies, snapping a five-day losing run to climb 0.7%. The won was on track to notch its biggest percentage rise since March 17.

The Malaysian ringgit gained 0.1%, its sharpest rise since April 5, after falling for the past five sessions.

Indonesia’s rupiah, Philippines peso and the Singapore dollar were largely flat. A US Labor Department’s report showed consumer prices surged to 8.5% in the 12 months through March, slightly higher than the estimated 8.4%, but investors focused on the so-called core CPI that fell short of estimates at 6.5%.

The Federal Reserve’s unfettered hawkish stance has set the stage for further policy tightening narrative from the emerging markets in Asia as rising prices are a concern globally.

Investor focus will now be on a slew of policy decisions from the European Central Bank, Monetary Authority of Singapore and Bank of Korea on Thursday.

The market, however, remained concerned about a protracted war after Russia said peace talks with Ukraine hit a dead-end on Tuesday.

In addition to geopolitical tensions, risk appetite will continue to struggle in the face of headwinds from rising oil prices and the COVID-19 situation in China, said Yeap Jun Rong, a market strategist at IG, in a note. Taiwan stocks led gains among emerging markets with a 1.8% jump. Its currency firmed 0.3%. The country’s central bank governor said inflation would slow by the third quarter and any rate rise decisions would depend on consumer price data.