WORLDWIDE: HEADLINES 

Japan Business Mood Subdued On Chip Shortage, Raw Materials Costs – Reuters Tankan 

Confidence at Japanese manufacturers in July was subdued, a Reuters poll showed, reflecting pressure from a problematic chip shortage, China’s heavy pandemic response and a weak yen that is making imported materials increasingly expensive. 

The Reuters Tankan – which closely tracks the Bank of Japan’s quarterly tankan survey – showed both manufacturers’ and service-sector morale only improving modestly over the next three months. 

The subdued sentiment adds to a recent mixed batch of data that underlines the economy’s difficulty to stage a robust recovery, and shows that companies struggled to benefit from improving demand, particularly at home. 

The poll of 495 big and midsize firms between June 29 and July 8, of which 248 responded, showed business managers were worried about the fallout from China’s COVID-19 curbs and a persistent chips and parts shortage. 

“Our sales are declining due to the impact of China’s lockdowns and the semiconductor shortage,” said a manager at a transportation equipment producer. 

Full coverage: REUTERS 

S.Korea’s C.bank Joins Peers In Historic Half-Point Rate Hike 

South Korea’s central bank on Wednesday delivered a historic half-point interest rate hike to wrest control of inflation running at the fastest pace in 24 years. 

The Bank of Korea (BOK) raised its benchmark policy rate (KROCRT=ECI) by 50 basis points to 2.25%, the biggest increase since the bank adopted the current policy system in 1999, as pressure mounts for policymakers to act faster. 

Twenty-seven of 32 analysts expected the bank to go for an unprecedented half-point hike in a Reuters poll, while the remaining five expected a quarter-point hike. 

The decision could help curb further weakening of the won after the currency tumbled 9.4% against the U.S. dollar this year, making it one of the worst performers among emerging markets. 

Wednesday’s move keeps the BOK at the forefront of global monetary tightening as inflation threatens to become entrenched for a resource-poor nation grappling with surging energy prices, compounded by the war in Ukraine. 

Full coverage: REUTERS 

WORLDWIDE: HEADLINES 

Asian Shares Bounce, Markets On Edge Ahead Of U.S. Inflation Data  

Asian stocks gained on Wednesday, taking back some of their recent losses, while the euro hovered just above parity against the dollar ahead of a highly anticipated U.S. inflation report later in the global day. 

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) gained 0.65%, snapping two straight days of losses, after having slumped to its lowest in two years the day before. 

Taiwanese stocks led the gains, with Taiwan Semiconductor Manufacturing Corp (2330.TW) a regional and local index heavyweight rallying 4%, after Taiwan’s finance ministry said on Tuesday it would activate its stock stabilisation fund. The market (.TWII) fell to a 19-month low that day. 

Japan’s Nikkei (.N225) was up 0.45% after losing nearly 2% the previous day. 

But most moves felt insubstantial ahead of the release of U.S. inflation data for June, which economists polled by Reuters expect to have accelerated by 8.8% on an annual basis, a 40-year peak. 

A high inflation print would likely be read by the U.S. Federal Reserve as a sign they need to continue with aggressive interest rate rises to get on top of surging prices, even if this might push the economy into recession. 

Full coverage: REUTERS 

Euro Clings To Parity As Traders Wait On U.S. Inflation

The euro hovered a whisker above parity on the dollar on Wednesday ahead of U.S. inflation data, with traders wary a sky-high reading could force it to lows not seen in decades. 

Markets are also wary of a surprise from the Reserve Bank of New Zealand, which sets policy at 0200 GMT, with economists expecting a 50 basis point interest rate hike. 

The New Zealand dollar , which hit a two-year low of $0.6097 on Monday and inched up to $0.6119 in early trade, is vulnerable to a further drop if the central bank’s statement is focused more on risks to growth rather than inflation. 

The common currency , meanwhile, is down nearly 12% this year and fell as low as $1.0005 on Tuesday as war on Europe’s eastern edge has triggered an energy crisis that has hurt the continent’s growth outlook. It last bought $1.0030. 

Economists forecast headline U.S. inflation accelerated to 8.8% year-on-year in June, a 40-year high, which is likely to reinforce expectations of interest rate hikes in response and help the dollar in a market nervous about both rates and growth. 

“I think the U.S. dollar will keep increasing if the U.S. CPI is stronger than expected,” said Commonwealth Bank of Australia strategist Joe Capurso in Sydney. “There’s definitely a very good chance that the euro falls below parity tonight.” 

Full coverage: REUTERS  

Oil Prices Slip On Anticipated U.S. Inventory Build Amid Demand Worries 

Oil prices fell in early Asian trading on Wednesday as U.S. inventory data showed buildups in crude oil and refined products amid rising fears of a global economic slowdown. 

Brent crude futures dropped 68 cents, or 0.7%, to $98.81 a barrel at 0002 GMT. U.S. West Texas Intermediate crude declined 72 cents, or 0.8%, at $95.12, also the lowest in three months. 

Investors have sold oil positions on worries that aggressive interest rate hikes to stem inflation will spur an economic downturn that will hit oil demand. Prices fell by more than 7% in the prior session amid volatile trading. 

Renewed COVID-19 travel curbs in China also weighed on the market. Multiple cities in the world’s second-biggest economy have adopted fresh restrictions, from business shutdowns to broader lockdowns, in an effort to rein in new infections from a highly infectious subvariant of the virus. 

Full coverage: REUTERS