Asian Stock Market Currently at 7-Week Lows, Japanese Markets Closed On Account of National Holiday

On Thursday, Asian stock markets were near seven-week lows, while the dollar was near multi-week highs, as a string of strong economic data worried investors that interest rates would need to rise and stay high in order to keep inflation at bay.

In early trade, MSCI's broadest index of Asia-Pacific shares outside Japan fell to its lowest level since January 6. It rose 0.5 percent as the morning progressed. Nasdaq futures rose 0.9% after chip designer Nvidia's revenue beat sent its shares up 9% after-hours.

Oil prices fell sharply overnight, and Brent crude futures clung to support near $80 per barrel on Thursday.

Markets in Japan were closed due to a national holiday.

Wall Street indexes fell overnight and are on track for their worst week of the year, as stronger-than-expected labour, inflation, retail sales, and manufacturing data in the United States have traders pricing interest rates to remain higher for longer.

The minutes of the Federal Reserve meeting this month, which reinforced a hawkish tone, did little to alleviate the concern.

"Markets have been forced to reprice interest rate expectations, not only higher, but also calling into question the view that once peak rates are reached, central banks will quickly pivot to cutting interest rates," said ANZ economist Finn Robinson.

"We should applaud economic resilience," he said.

"But central banks are uncomfortable with current levels of aggregate expenditure and labour market demand...if the upcoming run of February data for the U.S. confirm robust economic activity, it is difficult to see how risk will recover in the near term." S&P 500 futures drifted 0.4 per cent higher in Asia.

The Bank of Korea, on the other hand, provided some respite by pausing a year-long streak of rate hikes.

The Kospi rose 1%, leading gains in the region, while most other markets fell.

Stock movements in Australia were influenced by the results season. Qantas Airways reported a record first-half profit, but shares fell 7.3%, the most in a year, after the company warned that fares would likely fall.

"They'll panic on shadows because the market is stretched," said Mathan Somasundaram, founder of Deep Data Analytics in Sydney.

"We are seeing more and more evidence that consumers are stretched, consumer spending is going to be curbed," he said, pointing to a strong result from grocer Woolworths that suggested more people are cooking as restaurant prices rise.

The Japanese holiday slowed currency trade. The dollar remained near its strongest levels since early January, but was unable to break to new highs.

The Australian and New Zealand dollars both rose slightly from strong support levels, with the Aussie last up 0.4% to $0.6832 and the Kiwi up the same amount to $0.6242. [FRX/]

The euro remained stable at $1.0619, while the yen, which has been falling, last traded at 134.80 per dollar.

In Japan, speculation abounds that a policy shift is on the horizon. Inflation data due on Friday, as well as a Monday appearance by Bank of Japan governor nominee Kazuo Ueda, are seen as providing hints about the timing.

US Treasuries rose overnight, but a hawkish tone in the Fed minutes dampened the gains. Due to the holiday in Tokyo, ten-year notes were not traded in Asia.

Gold held steady at $1,825 per ounce.

Final European inflation and growth figures are due later in the day, but no significant changes to preliminary figures are expected. Fed officials Mary Daly and Raphael Bostic are also scheduled to speak later on Thursday.