Stock rally stalls in Asia; Australian dollar slides on weak inflation

The Australian dollar tumbled to six-week lows on Wednesday and three-year bonds rallied to record highs after surprisingly weak inflation figures boosted calls for rate cuts.
The Australian dollar tumbled to six-week lows on Wednesday and three-year bonds rallied to record highs after surprisingly weak inflation figures boosted calls for rate cuts.PHOTO: REUTERS

SYDNEY (BLOOMBERG, REUTERS) - A stock rally that took US benchmarks to their highest levels on record petered out in Asia on Wednesday (April 24(, while Australia's dollar slumped after weaker-than-expected inflation data boosted bets on lower interest rates there.

Most main Asian equity gauges saw modest losses, with Australian shares bucking the trend. The region largely lacked the impetus that took American stocks up on Tuesday - stronger-than-expected corporate earnings reports. The S&P 500 Index and the Nasdaq Composite marked fresh highs as Twitter, Lockheed Martin and Hasbro climbed following favorable first-quarter figures, adding to a rally led by the biggest technology stocks.

The MSCI Asia Pacific was down 0.3 per cent as of 11:45am Tokyo time. The Topix Index fell 0.3 per cent, while the S&P/ASX 200 Index rose 0.9 per cent.

The Shanghai Composite Index fell 0.4 per cent and the Hang Seng Index dropped 0.3 per cent. The Kospi Index fell 1.0 per cent.

S&P 500 futures slid 0.1 per cent after the benchmark rose 0.9 per cent.

Tuesday's gains capped a momentous run for US equities, with the main benchmark up 25 per cent from the low reached on Christmas Eve. Traders found fresh catalysts to buy as earnings season gathered steam, with almost 80 per cent of S&P 500 companies reporting results that have exceeded estimates. Still looming is economic news, with US first-quarter gross domestic product data due on Friday, while emerging market investors will be nervously watching the US dollar's climb.

The Australian dollar tumbled to six-week lows on Wednesday and three-year bonds rallied to record highs after surprisingly weak inflation figures boosted calls for rate cuts, while the New Zealand kiwi stayed near a four-month trough.

The Australian dollar slid as low as US$0.7031, a level not seen since March 11, after first-quarter inflation slowed to the lowest in three years to zero per cent when analysts were looking for a 0.2 per cent increase.

Elsewhere, the pound held losses as UK Prime Minister Theresa May confronted further challenges to her leadership. Oil retreated after three sessions of gains. West Texas oil fell 0.6 per cent to US$65.92 a barrel.