EQUITIES

Asia-Pacific stocks were mostly higher in Wednesday trade as investors watched for market reaction to the release of the U.S. inflation report.

The Nikkei 225 in Japan climbed 1.76%, South Korea’s KOSPI rose 1.44% while the S&P/ASX 200 in Australia edged 0.31% higher. In Southeast Asia, the Singapore’s FTSE Straits Times Index added. 0.64%. Hong Kong’s Hang Seng index recovered from earlier losses, rising 0.16% by the afternoon.

The Shanghai composite meanwhile slipped 0.44%, as concerns around the mainland’s COVID-19 situation continue to weigh on investor sentiment.

Shares on Wall Street slipped overnight following the U.S. inflation report release. The Dow Jones Industrial Average shed 0.26%, to 34,220.36. The S&P 500 dipped 0.34% to 4,397.45 while the Nasdaq Composite declined 0.3% to 13,371.57.

OIL

Oil prices were little changed on Wednesday after surged more than 6% in the previous session as progress in Russia-Ukraine peace talks came to a standstill and China started reopening Shanghai gradually.

Worries of tight supply persists after Russian President Vladimir Putin on Tuesday said peace talks to resolve its invasion of Ukraine had come to a dead end.

Meanwhile in OPEC’s Monthly Oil Market Report released on Tuesday, the cartel reportedly cut its oil demand growth estimate for 2022 due to lower global economic growth. The cartel now sees global oil demand growth this year at 3.67 million bpd, down by 480,000 bpd from last month’s growth estimate of 4.15 million bpd. At the same time, it lowered projections for supplies from outside the cartel by 330,000 barrels a day, with Russia’s output now seen 530,000 barrels a day below previous estimate. Data in OPEC’s latest monthly report also showed that the group’s troubles persist, with its 13 members adding only 57,000 barrels a day in March — about a fifth of the amount planned. 

U.S. fuel demand appeared to be strong, as industry data showed gasoline stocks fell by 5.1 million barrels and distillate stocks fell by 5 million barrels, market sources said, citing American Petroleum Institute figures.

Brent crude futures was last down 0.33%, to $104.58 a barrel, while U.S. WTI crude futures slipped 0.6%, to $100.46 a barrel.

CURRENCIES

Benchmark 10-year U.S. Treasury yields dropped slightly to 2.748%, after scaling 2.83% earlier in the day, a level last seen in late 2018. Inflation data that rose largely in line with estimates gave investors some relief. Anything that indicates a softening momentum on the inflation front is going to mean that the Fed perhaps may not have to go as aggressively in tightening monetary policy. The two-year yield was 2.4362%.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 100.300 as it continued to hold above the 100 level.

The Reserve Bank of New Zealand announced its decision to raise the official cash rate by 50 basis points to 1.5%. The move represented the RBNZ’s fourth consecutive hike and its largest rate increase in more than 20 years. The New Zealand dollar initially strengthened following the decision but later fell into negative territory, last trading at $0.6814 against an earlier high of $0.6901.

The Bank of Canada also will meet later today and is also expected to deliver a 50-bp hike as policymakers around the world start hastening efforts to contain inflation.

GOLD

Gold prices in rangebound trading on Wednesday as fresh concerns about the war in Ukraine countered the high dollar and Treasury yields.

Spot gold rose 0.14% at $1,968.90 per ounce, while U.S. gold futures slipped 0.22% at $1,971.80.

ECONOMIC OUTLOOK

Asian shares rose on Wednesday boosted by U.S. inflation figures that fared better than markets' worst expectations and reports of partial easing of some of China's tight COVID-19 lockdowns, though gains were capped by waning prospects for peace in Russia-Ukraine peace talks.

Data published by the U.S. Labor Department on Tuesday showed CPI surged to 8.5%, the most in 16-1/2 years, slightly higher than the estimated 8.4%, but investors focused on the so-called core CPI that fell short of estimates at 6.5%, a sign that inflation may have peaked. Money markets still expect a 93.5% likelihood of a 50-basis point rate hike at the Fed's meeting next month, largely unchanged from before the data.

The softening momentum gave a pause in yield’s advance, which offered some relief to mega cap growth and technology stocks.

Share market sentiment meanwhile were capped after Russian President Vladimir Putin on Tuesday blamed Ukraine for derailing peace talks and said that on-and-off peace negotiations "have again returned to a dead-end situation” while suggesting the seven-week offensive is going to plan.

First-quarter earnings season bursts through the starting gate later today, with big banks leading the way.