Asia-Pacific markets broadly decline as investors await U.S. inflation data

SINGAPORE — Asia-Pacific markets declined on Friday as investors assess risks associated with the new omicron Covid variant and look ahead to key inflation data in the U.S.

Japan’s Nikkei 225 extended losses from the previous session and declined 1% to 28,437.77. The Topix index fell 0.77% to 1,975.48.

In South Korea, the Kospi fell 0.64% to 3,010.23 while the Kosdaq was down 1.1% at 1,011.57.

Australian shares also traded lower. The ASX 200 fell 0.42% to 7,353.50, with the energy subindex dropping 1.49% as global oil prices struggled for gains.

Energy names in Australia sold off: Santos shares fell 2.11%, Oil Search was lower by 2.42% and Woodside Petroleum declined 0.72%.

In company news, Fortescue Metal Group CEO Elizabeth Gaines will step down from her role once her successor is found as the miner shifts to become a diversified renewable energy and resources player. Fortescue shares fell 0.82%.

Shares on the Chinese mainland also traded lower, with the Shanghai composite closing down 0.18% at 3,666.35 while the Shenzhen component dipped 0.24% to 15,111.56.

In Hong Kong, the Hang Seng index fell 1.07% to 23,995.72. Benchmark indexes in Singapore and India traded lower in the afternoon.

Friday’s session in Asia follows overnight declines on Wall Street.

“The more cautious tone in risk market probably has as much or more to do with apprehension ahead of tonight’s US CPI report,” Ray Attrill, head of foreign-exchange strategy at the National Australia Bank, said in a morning note.

While a jump in inflation is hardly news to the market, investors will look to see how hot the level is and what kind of a reaction that might trigger from the U.S. Federal Reserve.

“We expect the data will reinforce that underlying inflation in the US is both broad and high,” said Kim Mundy, senior economist and currency strategist at the Commonwealth Bank of Australia, in an early morning note. “Importantly, another strong print will reinforce FOMC Chair Jay Powell’s hawkish turn last week.”

Last week, the Fed chair said it was “probably a good time to retire” the word “transitory” to describe inflation and promised that the central bank would be vigilant in controlling inflation.

At its policy meeting next week, the Fed is expected to say that it will speed up the pace of its bond purchase taper, while also likely hint at a more aggressive path for interest rate hikes in 2022.

In the currency market, the U.S. dollar traded near flat against a basket of its peers, trading at 96.241. The index rose in the previous session from levels near 95.967 to 96.271.

Analysts said fresh concerns about the omicron strain’s impact on economic recovery likely supported the greenback overnight.

The Japanese yen weakened 0.09% to 113.54 per dollar, while the Australian dollar inched higher to $0.7156.

Oil prices settled lower overnight, with Brent and U.S. crude declining 1.9% and 2%, respectively.

On Friday during Asian trading hours, oil prices struggled for gains — U.S. crude traded fractionally lower $70.89 per barrel in the afternoon and global benchmark Brent was down 0.28% at $74.21.