Asian Stocks Edge Up as Chip Selloff Eases Before US CPIWorld

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.5 percent after US stocks ended the previous session with a mild loss. Japan’s Nikkei rose 0.2 percent and South Korea’s Kospi added 1.8 percent.

Sentiment remained cautious, however, with oil prices elevated as concern over energy supplies intensified following Houthi missile and drone attacks on Saudi Arabia. US crude ticked up 0.8 percent to $94.96 a barrel, while Brent crude rose to $106.6.

“After yesterday’s chip-led sell-off in the region, market participants will be gauging whether shakiness across major indices eases,” said Kyle Rodda, an analyst at Capital.com. “The geopolitical situation globally and the impact on energy markets won’t help,” he added.

In another sign of risk aversion, longer-dated bonds rallied as investors sought safety. The yield on the benchmark 10-year Treasury note was steady at 5.221 percent after touching its lowest level in nearly two weeks, while the 30-year yield held at 5.569 percent following a three-day decline.

On Wall Street overnight, US bank stocks lost ground after mixed quarterly earnings results from Citigroup and peers, weighing on broader markets. US stock futures pointed to a flat open, with S&P 500 e-minis up 0.04 percent at 7,858.8.

<h2>Inflation test awaited</h2> Market participants were awaiting the US consumer price index report on Wednesday, hoping to extract clues on the Federal Reserve&#8217;s interest-rate outlook. Economists on average estimated that headline inflation accelerated to an annual 3.6 percent in September on rebounding energy prices, with core CPI rising 0.2 percent on a monthly basis.

&#8220;The risk is the core CPI surprises to the upside because of strong consumer demand and higher costs, pushing up market pricing of an October Fed hike and the USD,&#8221; said Carol Kong, a currency strategist at Commonwealth Bank of Australia.

Investors priced in a 22 percent chance of an October interest-rate hike ahead of the CPI data, according to the CME FedWatch Tool. New York Federal Reserve President John Williams said the Fed may need to raise its policy rate once more this year to slow inflation, but that he sees no need for hikes in 2027.

The dollar index, which tracks the greenback against the currencies of major trading partners, was down at 102.17, while the euro was little changed at $1.1202. Market participants were also awaiting Chinese inflation data on Wednesday, looking for signs of reviving domestic demand amid deflationary pressure.