By Wayne Cole SYDNEY (Reuters) – Asian stock markets were mixed on Monday as a top U.S. central banker warned investors not to be swayed by an inflation number, while Chinese shares gained on signs of help in the country’s hard-hit property sector. A small loss in US inflation was enough to see yields on the two-year note fall 33 basis points for the week and the dollar lose nearly 4% – the fourth-biggest weekly decline since the era of freely floating exchange rates began more than 50 years ago. However, the resulting easing of US economic conditions was not fully welcomed by the Federal Reserve, with governor Christopher Waller saying it would take a series of soft reports for the bank to get off the brakes. Waller added that markets were way ahead of themselves on a single inflation print, although he conceded that the Fed could now start thinking about hiking at a slower pace. Futures are betting heavily on a rate rise of half a point to 4.25-4.5% in December, then a two-quarter move to a high in the 4.75-5.0% range. Two-year yields rose to 4.42%, after diving as much as 4.29% on Friday. “The surprise drop in CPI is in line with a broad range of indicators pointing to a downward shift in global inflation that should encourage a moderation in the pace of monetary policy tightening at the Fed and elsewhere,” said Bruce Kasman, head of economic research at JPMorgan (NYSE). :). “This positive message must be tempered by the recognition that the downward shift in inflation will be too small for central banks to declare mission accomplished and that more tightening is likely on the way.” MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.1 percent, after jumping 7.7 percent last week. fell 0.8%, while South Korea was flat. fell 0.3 percent and Nasdaq futures lost 0.5 percent. EUROSTOXX 50 futures gained 0.4%, while futures added 0.1%. LOOKING AT CHINA Traders also waited to see whether Chinese shares could extend their big rally amid reports that regulators have asked financial institutions to provide more support to stressed property developers. China’s property index jumped 5% in response. Blue chips rose 1.1%, helped by a series of changes to China’s COVID restrictions, even as the country reported more cases over the weekend. “It is hard to see how the news of the case is anything but negative from an economic perspective, but it is symbolic of the movement, however small, in the zero COVID strategy that markets are happily clinging to,” said Ray Attrill, chief of the FX strategy. at NAB. US President Joe Biden will meet personally on Monday with Chinese leader Xi Jinping for the first time since taking office, with US concerns over Taiwan, Russia’s war in Ukraine and North Korea’s nuclear ambitions are at the top of his agenda. News of the COVID rules had sparked a short-term rebound in the yuan, which added to broad pressure on the dollar as yields fell. The yuan was 1.4% firmer on Monday – its biggest such move since 2005. It was up a fraction on Monday at 106,920, but still well below last week’s peak of 111,280. The euro was slightly lower at $1.0308, after rising 3.9% last week, while the dollar was flat at 139.49 yen after falling 5.4% last week. The dollar lost almost as much against the Swiss franc, partly because of warnings from the Swiss National Bank that it would use interest rates and currency purchases to tame inflation. Sterling fell back to $1.1755 ahead of the British Chancellor’s autumn statement on Thursday, where he is expected to outline tax rises and spending cuts. Cryptocurrencies remained under pressure as at least $1 billion of client funds were reported to have disappeared from the crashed crypto exchange FTX. traded down 1.5% at $16,055, having fallen nearly 22% in the past week. The dollar’s recent retreat provided a much-needed fillip to commodities, with gold holding steady at $1,760 an ounce after jumping more than $100 last week. [GOL/] Oil futures extended gains on hopes of a recovery in Chinese demand, rising 28 cents to $96.27 and up 20 cents to $89.16 a barrel. [O/R]
