Asian shares fall as investors brace for inflation report

Stocks fell across Asia and the dollar steadied on Wednesday as investors were reluctant to make moves ahead of the release of U.S. inflation data that could point to the Federal Reserve’s appetite for more aggressive rate hikes, Reuters reported.

The Consumer Price Index (CPI) report will be released at 1230 GMT, with markets watching for signs that inflation eased in July despite last week’s unexpectedly strong U.S. jobs numbers.

The market is currently pricing in a 69.5% chance of a 75 bps rate hike at the Fed’s next meeting . Economists polled by Reuters expect the CPI to show year-on-year headline inflation (USCPNY=ECI) of 8.7%, far above the Fed’s target of 2% but down from last month’s red-hot 9.1%.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 1.31%, while Japan’s Nikkei (.N225) extended losses from the previous day and closed down 0.65%.

South Korea’s KOSPI (.KS11) lost 0.95%, Australia’s AXJO (.AXJO) dropped 0.5%, and Taiwan’s TAIEX (.TWII) fell 0.74%.

The slips in Asian markets tracked Wall Street, which closed on Tuesday with all three major indices down.

The S&P 500 (.SPX) fell 0.42%, the Dow Jones Industrial Average (.DJI) dropped 0.18%, and the Nasdaq Composite (.IXIC) lost 1.19%.