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Asia shares spooked by U.S. inflation scare, hope for Fed calm

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Author of the article: SYDNEY — Asian shares slipped to seven-week lows on Thursday after a dismaying rise in U.S. inflation bludgeoned Wall Street and sent bond yields surging on worries the Federal Reserve might have to move early on tightening. “Higher inflation is a definite negative for equities, given the likely rates response,” said…

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SYDNEY — Asian shares slipped to seven-week lows on Thursday after a dismaying rise in U.S. inflation bludgeoned Wall Street and sent bond yields surging on worries the Federal Reserve might have to move early on tightening.

“Higher inflation is a definite negative for equities, given the likely rates response,” said Deutsche Bank macro strategist Alan Ruskin.

“The more nominal GDP gains are dominated by higher inflation, especially wage inflation, the more the possible squeeze on profit margins. It plays to a more choppy, less bullish equity bias.”

MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.6%, though trade was thinned by holidays in a number of countries.

Japan’s Nikkei fell 1.8%, and touched its lowest since early January, while Chinese blue chips lost 0.7%.

Asian markets were already on the backfoot this week amid inflation worries and a tech sell-off on Wall Street, and nerves were further jangled on Wednesday when Taiwan stocks tumbled on fears the island could face a partial lockdown amid an outbreak of the virus.

Nasdaq futures were trying to rally with a gain of 0.5%, while S&P 500 futures added 0.4%. But EUROSTOXX 50 futures were still catching up with overnight falls and lost 0.5%, while FTSE futures shed 0.3%.

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Wall Street was blindsided when data showed U.S. consumer prices jumped by the most in nearly 12 years in April as booming demand amid a reopening economy met supply constraints at home and abroad.

The jump was largely due to outsized increases in airfares, used cars and lodging costs, which were all driven by the pandemic and likely transitory.

Fed officials were quick to play down the impact of one month’s numbers, with vice chair Richard Clarida saying stimulus would still be needed for “some time.”

“It likely would take a very strong May jobs report, with sizable upward revisions to March and especially April, to get the Fed to start a discussion about tapering at its June meeting,” said JPMorgan economist Michael S. Hanson.

“We continue to expect the Fed to begin scaling back its pace of asset purchases early next year.”

Investors reacted by pricing in an 80% chance of a Fed rate hike as early as December next year.

Yields on 10-year Treasuries steadied at 1.68%, having climbed 7 basis points overnight in the biggest daily rise in two months. The yield curve also steepened markedly.

That was a shot in the arm for the dollar, which had been buckling under the weight of rapidly expanding U.S. budget and trade deficits. The euro retreated to $1.2082, leaving behind a 10-week peak at $1.2180.

The dollar stood at 109.60 yen, having hit a five-week top of 109.78 and well off this week’s low of 108.34. The dollar index hovered at 90.672, up from a 10-week trough of 89.979.

In the crypto currency space, Bitcoin steadied after sliding more than 10% when Elon Musk tweeted that Tesla Inc has suspended the use of bitcoin to purchase its vehicles.

The rise in yields and the dollar pressured gold, which was left at $1,819 an ounce and off a multiple-top around $1,845.

Oil prices backed away from two-month highs, hit after U.S. crude exports plunged and the International Energy Agency (IEA) said demand was already outstripping supply.

Brent was off 46 cents at $68.86 a barrel, while U.S. crude lost 47 cents to $65.61.

(Editing by Sam Holmes & Shri Navaratnam)

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Soybeans fall 1%, Chinese demand limits losses

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Author of the article: CANBERRA — U.S. soybean futures fell 1% on Monday as the dollar strengthened, although strong Chinese demand limited the losses. FUNDAMENTALS * The most-active soybean futures on the Chicago Board Of Trade were down 1.1% to $13.80-1/4 a bushel by 0131 GMT, having firmed 5% percent on Friday. * Corn futures…

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CANBERRA — U.S. soybean futures fell 1% on Monday as the dollar strengthened, although strong Chinese demand limited the losses.

FUNDAMENTALS

* The most-active soybean futures on the Chicago Board Of Trade were down 1.1% to $13.80-1/4 a bushel by 0131 GMT, having firmed 5% percent on Friday.

* Corn futures fell 1.3% to $6.46-3/4 a bushel, having gained 3.5% in the previous session.

* Wheat futures slid 0.9% to $6.57 a bushel, having closed up 3.7% on Friday.

* Chinese state-owned importers bought at least eight cargo shipments of U.S. soybeans on Friday, the country’s largest U.S. soybean purchases in 4-1/2 months, two U.S. traders familiar with the deals said.

* About 41% of Iowa, the nation’s top corn producer and No. 2 soybean state, was under severe drought last week, according to the weekly U.S. drought monitor published last week.

MARKET NEWS

* The dollar held near multi-month peaks against other major currencies, after the U.S. Federal Reserve surprised markets last week by signaling it would raise interest rates and end emergency bond-buying sooner than expected.

* Oil prices nudged up, underpinned by strong demand during the summer driving season and a pause in talks to revive the Iran nuclear deal that could indicate a delay in resumption of supplies from the OPEC producer. (Reporting by Colin Packham; editing by Uttaresh.V)

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Boral sells U.S. products business after rejecting Seven bid

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Author of the article: Australia’s Boral Ltd said it would sell its North American building products business to a unit of NYSE-listed Westlake Chemical Corp for $2.15 billion, throwing a spanner in the works of a takeover bid by Seven Group. Boral’s shares rose as much as 4% to A$7.06, their highest since October 2018,…

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Australia’s Boral Ltd said it would sell its North American building products business to a unit of NYSE-listed Westlake Chemical Corp for $2.15 billion, throwing a spanner in the works of a takeover bid by Seven Group.

Boral’s shares rose as much as 4% to A$7.06, their highest since October 2018, after the building and construction materials supplier revealed its deal to sell the U.S.-based business in a disclosure responding to Seven’s bid.

Boral had already asked shareholders to reject an off-market zero premium bid by Seven Group, a conglomerate controlled by Australian media owner Kerry Stokes, saying it undervalued the company.

Seven owns 23.18% of Boral, and made the offer in May after failing to raise its stake to 30% due to regulatory setbacks.

Seven Group said the business had been sold for a loss in a rushed response to their offer.

“Our view is that Boral should have secured more. This business has been outperforming while the Australian business is under-performing,” a Seven spokesperson said in an email.

One analyst said the U.S. deal would not have a great impact on Seven’s takeover attempt.

“Seven Group made a bid that was expected to get turned down to clear the way for them to keep buying more,” said Mathan Somasundaram, CEO at Deep Data Analytics.

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“Seven Group’s historical trend in these scenarios suggests that they will get as much as they are allowed and stay there as a blocking stake. When the cycle turns weak, they will move in and take control gradually,” he said.

Boral’s shares have surged more than 30% this year, as monetary and fiscal stimulus helped Australia’s property market rebound from last year’s pandemic lows.

Boral CEO Zlatko Todorcevski said the company expected significant surplus to be returned to shareholders from the sale, with its net debt target falling from A$1.5 billion to A$1.3 billion.

($1 = 1.3330 Australian dollars) (Reporting by Arundhati Dutta and Tejaswi Marthi in Bengaluru; Editing by Stephen Coates)

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Gold prices claw back as U.S. Treasury yields retreat

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Author of the article: Gold prices firmed on Monday, after posting a 6% drop last week, as a retreat in U.S. Treasury yields boosted the allure of the non-yielding metal. FUNDAMENTALS * Spot gold was up 0.5% at $1,772.34 per ounce, as of 1004 GMT. Last week, bullion prices posted their worst week since March…

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Gold prices firmed on Monday, after posting a 6% drop last week, as a retreat in U.S. Treasury yields boosted the allure of the non-yielding metal.

FUNDAMENTALS

* Spot gold was up 0.5% at $1,772.34 per ounce, as of 1004 GMT. Last week, bullion prices posted their worst week since March 2020 on the U.S. Federal Reserve’s hawkish outlook.

* U.S. gold futures edged 0.2% higher to $1,772 per ounce.

* The benchmark U.S. Treasury yields fell to their lowest since March 3, reducing the opportunity cost of holding bullion, which pays no return.

* The U.S. dollar held near multi-month peaks against other major currencies on Monday, after the Fed surprised markets last week by signaling it would raise interest rates and end emergency bond-buying sooner than expected.

* Minneapolis Federal Reserve President Neel Kashkari said on Friday he wants to keep the U.S. central bank’s benchmark short-term interest rate near zero at least through the end of 2023 to allow the labor market to return to its pre-pandemic strength.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 1.1% to 1,053.06 tonnes on Friday from 1,041.99 tonnes on Thursday.

* Gold purchases in India ticked up last week after a decline in local rates, although dealers cautioned that demand is unlikely to return to normal levels soon.

* Russia’s gold reserves stood at 73.7 million troy ounces, as of the beginning of June, the central bank said on Friday.

* Silver was up 0.6% at $25.95 per ounce, palladium climbed 1% to $2,490.93, while platinum rose 0.4% to $1,037.89. (Reporting by Eileen Soreng in Bengaluru, Editing by Sherry Jacob-Phillips)

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