BURSA ASIA - SHANGHAI. Asian shares fell on Wednesday after data showing the biggest jump in U.S. inflation in 13 years fuelled some market expectations that the Federal Reserve could exit pandemic-era stimulus earlier than previously thought.
But U.S. bond yields and the dollar were lower in Asian trade after jumping a day earlier on the inflation data.
The U.S. consumer price index jumped 0.9% in June, the Labor Department said on Tuesday. That was above market expectations and the largest gain since June 2008.
"Against the background of higher, longer U.S. inflation, a taper coming earlier seems to be the likely direction of travel as far as policy goes," said Rob Carnell, ING's Asia-Pacfic head of research.
"The only thing that comes across as a slight salve in all of this is that no one seems to be expecting much in terms of Fed rates. So we might be getting sooner, but we're not getting very much."
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The Reserve Bank of New Zealand (RBNZ) on Wednesday became the latest central bank to plot an end to pandemic-era policy, as it surprised markets by announcing it would end its bond purchase progamme from next week, sending the Kiwi dollar sharply higher.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.33%, as Chinese blue-chips dipped 1%, Hong Kong's Hang Seng slipped 0.66% and Seoul's Kospi lost 0.29%.
Australian shares were 0.34% higher on a boost from miners and energy firms.
Japan's Nikkei was down 0.2%.
Investors are keeping a close eye on the semi-annual testimony of Fed Chair Jerome Powell to Congress on Wednesday and Thursday for more clues on whether the Fed will take more aggressive steps to halt rising inflation. Powell's testimony comes as the Biden administration continues to push for fiscal stimulus to boost the U.S. economy.
