Asian shares fell as U.S. inflation hits biggest in 13 years

Asian shares declined on July 14 after data showing the biggest boost in U.S. inflation in 13 years. Notably, data fuelled some market expectations that the Fed could pull back their support for the economy earlier than anticipated.

However, U.S. bond yields and the dollar were lower in Asian trade after rising a day earlier on the inflation data.

According to the Labor Department, the U.S. consumer price index surged 0.9% in June, the largest increase since June 2008.

On July 14, the Reserve Bank of New Zealand became the latest central bank to plot an end to pandemic-era policy. Remarkably, it surprised markets by stating it would end its bond purchase program from next week. The news pushed the New Zealand dollar sharply higher.

Moreover, MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.33%, as Chinese blue-chips dipped 1%. Meanwhile, Hong Kong’s Hang Seng declined by 0.66%. South Korea’s KOSPI lost 0.29% or 6.57 to 3,264.81.

Meanwhile, in Australia, ASX 200 rose by 0.31%, which equals 22.6, and hit 7,354.7. The rise came even as a lockdown in Sydney was extended for a further two weeks. The Westpac consumer sentiment index increased 1.5% in July against the previous month’s 5.2% decline. Japan’s Nikkei declined by 0.38% to 28,608.49.

Fed Chair Jerome Powell’s testimony to Congress is due on Wednesday and Thursday

Investors are waiting for the testimony of Fed Chair Jerome Powell to Congress on Wednesday and Thursday. Powell will reveal more clues about the Federal Reserve’s steps to halt increasing inflation.

As we know, in the previous session, Democrats on the U.S. Senate Budget Committee reached a deal on a $3.5 trillion infrastructure investment plan.

Additionally, in Asia, China will release second-quarter economic growth data on July 15. The latest news reveals that China’s central bank cut bank’s reserve requirement ratio (RRR) to help economic recovery.

China’s premier announced on July 14 that the country will keep its economic operations within a reasonable range over the next 18 months. The Asian giant will take comprehensive measures to ease increasing commodity prices.

The Dow Jones Industrial Average declined by 0.31% to 34,888.79. Meanwhile, the S&P 500 dropped 0.35% to 4,369.21 and the Nasdaq Composite fell by 0.38% to 14,677.65.

Moreover, Bond yields fell on Wednesday after increasing across the curve a day earlier.

The 30-year yield dipped to 2.0302% from a close of 2.037%. Meanwhile, the benchmark 10-year yield dropped to 1.3998% from a close of 1.415% on Tuesday.