MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.5 per cent and was on course for a 1 per cent weekly decline, snapping its four-week winning streak. Japan’s Nikkei fell 1.45 per cent. — AFP picSINGAPORE, May 24 — Asian stocks fell on Friday, while the dollar advanced as strong US economic data bolstered the prospect of interest rates staying higher for longer and the Federal Reserve taking its time in cutting rates, keeping investors away from risky assets.
Data on Thursday showed US jobless claims dropped while S&P Global’s Flash PMI survey showed business activity expanded faster than economists forecast in May.The robust economic data along with hawkish minutes from the Fed’s last meeting earlier in the week has led traders to dial back their bets on rate cuts this year, with markets now pricing in just 35 basis points of easing in 2024, versus expectations of 150 bps of cuts at the start of the year.
Atlanta Fed President Raphael Bostic said the US central bank may need to wait longer to cut interest rates because even with April’s slightly cooler inflation reading there is continued upward pressure on prices. The dollar’s ascent has kept the pressure on the yen. The Japanese currency was last at 157.03 per dollar, not far from the over three week low of 157.19 touched on Thursday.
“We believe that the Bank of Japan will leave its stance unchanged at its June meeting as they would like to confirm the turnaround in economic growth, particularly in private spending and wage growth, that may be seen in July,” said ING economists.