GLOBAL MARKETS-Asia shares at one-month lows as sell-off extends on inflation anxiety

* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* MSCI ex-Japan down for a second straight session
* Index hits one-month low, after tumbling 1.6% on Tuesday
* Markets await U.S. inflation report

By Swati Pandey
SYDNEY, May 12 (Reuters) - Asian shares fell for a second
straight session on Wednesday to one-month lows as investors
speculated surging commodity prices and growing inflationary
pressure in the United States could lead to earlier rate hikes
and higher bond yields globally.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS faltered 0.5%, after tumbling 1.6% on Tuesday
for its biggest daily percentage drop since March 24.
"There isn't a clear catalyst behind this purge," said
Marios Hadjikyriacos, investment analyst for XM.
"It seems to be a combination of inflation fears making a
comeback and some market participants moving higher along the
value spectrum, cutting their exposure to anything with a
stretched valuation."
At 682 points, the regional index is not too far from a
record high of 745.89 touched in February and is still up 3%
this year so far, on top of a 19% jump in 2020 and a near 16%
rise in 2019.
Shares in China opened in the red, with the blue-chip index
.CSI300 off 0.2%.
Australian stocks slipped 0.6% while South Korea's KOSPI
index .KS11 skidded 0.7%. Japan's Nikkei .N225 reversed
early gains to be down 0.4%.
Analysts, however, doubted the sell-off would extend much
further in a world of easy accommodative policy and fiscal
largesse.
Overnight on Wall Street, technology stocks were among the
biggest losers though the tech-focused Nasdaq .IXIC reversed
the bulk of its early 2% decline over the course of the day. The
Dow .DJI dropped 1.4% and the S&P 500 .SPX fell 0.9%.
The equity rout barely helped drive any safe haven flows
into the greenback even as futures pointed to yet another
negative open for Wall Street. E-mini futures for the S&P 500
ESc1 nudged 0.3% lower in early Asian trading.
"What is unusual about the last two days is that the
equity-market angst did not provide the U.S. dollar with a
notable lift," said Alvin T. Tan, head of Asia FX strategy at
RBC Capital Markets.
Tan said there was no sign of "risk-off" among regional
currencies either with the high-carry Indian rupees INR= and
Indonesia rupiah IDR= largely holding their ground.
"Still, it is not yet obvious if this signifies a new market
paradigm. As they say, one swallow does not make a summer," Tan
added.
All eyes are now on the U.S. consumer price index report to
be released by the U.S. Labor Department on Wednesday with
market-based measures of inflation expectations having moved
higher US5YTIP=RR US10YTIP=RR .
Treasury yields have remained stuck to a tight range. The
yield on benchmark 10-year Treasuries US10YT=RR edged lower to
1.6235%, a far cry from the 2% level seen in before the
coronavirus pandemic. US/
The U.S. Federal Reserve expects higher inflation though
officials have pointed to transient factors and base effect for
the temporary rise.
"The upshot is the Fed remains far away from achieving its
aim of average inflation of 2% per year. The Fed's
ultra-accommodative monetary policy is part of the reason why we
consider the USD downtrend is intact," said Commonwealth Bank of
Australia analyst Carol Kong.
The dollar was up 0.2% against the Japanese yen JPY= at
108.84 as it meandered in a narrow 107-110 band.
The dollar index =USD , which measures the greenback
against six major currencies, was little changed at 90.297,
after touching a two-month low of 89.979. USD/
The currencies of major natural resource suppliers such as
Canada stood firm amid rising commodity prices.
The loonie CAD=D3 held near a 3-1/2-year high of C$1.2078.
The Australian dollar AUD=D3 , another proxy for commodity
prices, was not far from a 10-week high of $0.7891 struck on
Monday.
Oil prices were lifted by fears of a gasoline shortage after
a cyber attack caused an outage at the largest U.S. fuel
pipeline system.
U.S. crude CLc1 gained 17 cents to $65.45 a barrel. Brent
crude LCOc1 added 15 cents to $68.70 per barrel. O/R
Spot gold was off at $1,829.9 an ounce. XAU=
In cryptocurrencies, ether ETH=BTSP hovered near record
highs touched on Monday to be at $4,162.86. The value of the
second-biggest digital token has surged over 5.5 times so far
this year.

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