WORLDWIDE: HEADLINES 

Fed’s Daly Says U.S. Inflation Could Get Worse Before It Gets Better 

High U.S. inflation may get even higher before subsiding in the face of Federal Reserve action and as supply chain strains recede, San Francisco Federal Reserve Bank President Mary Daly said on Tuesday. 

“We could have it be worse before it gets better but it is definitely going to get better,” Daly told CNN, adding that even so she doesn’t expect inflation to have fallen to 2% by the end of the year. Consumer prices rose 7% last year, eating into American paychecks. 

The Fed is expected to begin raising interest rates from near-zero levels next month, a move Daly said she supports. When it does, Daly said, the Fed should do neither too little nor be “overly aggressive,” mindful that the Fed alone cannot cure inflation that’s caused in large part by ongoing pandemic disruption. 

Full coverage: REUTERS 

Softbank Says Additional Alibaba ADS Registration Not Tied To Future Deal 

Alibaba’s (9988.HK), recent registration of additional American Depository Shares is not tied to any specific future transaction by SoftBank Group Corp (9984.T), a spokesperson for the Japanese conglomerate said on Wednesday. 

“The registration of the ADR conversion facility (F6 filing, which was filed by Alibaba), including its size, is not tied to any specific future transaction by SBG,” SoftBank said in a statement to Reuters. 

E-commerce giant Alibaba last week filed to register an additional one billion American Depository Shares. The move, Citigroup analysts said this week, “might also suggest potential selling intention by SoftBank.” 

“Since Softbank has been a pre-IPO investor, we believe a large proportion of those shares have not been previously registered as ADS,” Citi analysts including Alicia Yap wrote. 

SoftBank Chief Executive Masayoshi Son told analysts he was “surprised” and had not requested the filing, according to a person familiar with the matter speaking on the condition of anonymity. 

Alibaba “might have registered in advance a large number of ADS to support any future conversion plans of shareholders,” Citi wrote in a new note on Wednesday. 

SoftBank’s stake of around 25% in Alibaba is worth around $82 billion and has its origins in a $20 million investment in 2000. That rivals SoftBank’s own market capitalization of around $80 billion. 

Full coverage: REUTERS 

WORLDWIDE: FINANCE/BUSINESS 

Asian Stocks Track Wall St Tech Rally, U.S. Yields Cling To Highs 

Asian shares advanced on Wednesday with tech stocks particularly catching a lift following a strong session on Wall Street, while U.S. treasury yields held near multi-year highs ahead of closely watched inflation data this week. 

Investors across asset classes are devoting considerable thought to the pace and timing of interest rate hikes by central banks across the world. 

Barring any big surprises, the consumer price index should cement expectations the U.S. Federal Reserve will raise interest rates next month, with a strong print offering further support to those tipping a larger 50 basis point rise. 

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) added 1% to its highest in two weeks, helped by a 3% gain in Hong Kong-listed tech stocks (.HSTECH). 

Japan’s Nikkei (.N225) gained 0.9%. 

All three main Wall Street indexes closed higher with tech stocks including Apple Inc (AAPL.O) and Microsoft Corp (MSFT.O) jumping, as did bank stocks supported by the prospect of higher U.S interest rates. 

Nonetheless, the Nasdaq Composite (.IXIC) is still down 9.2% this year after a brutal January. 

Manishi Raychaudhuri, Asia-Pacific equity strategist at BNP Paribas, said market volatility was lingering as investors tried to figure out how often, how far and how fast central banks would raise interest rates. 

Full coverage: REUTERS 

Dollar Hits One-month High To Yen As U.S. Yields Rise 

The dollar touched a one-month high versus the yen on Wednesday, boosted by a climb in Treasury yields to multi-year peaks overnight as traders wait on U.S. inflation data this week for clues on the pace of Federal Reserve policy tightening. 

The euro continued to retreat from near a three-month high to Japan’s currency after European Central Bank President Christine Lagarde earlier this week tapped down expectations of aggressive interest rate hikes. 

A more hawkish tone from both the ECB and the Fed last week caught markets off guard and sent yields soaring on euro zone and U.S. debt in anticipation rates could rise faster and higher than previously expected. 

The dollar rose at one point in early Asian trading to 115.69 yen, the highest since Jan. 10, before pulling back to last trade 0.08% lower at 115.43. 

The 10-year Treasury yield surged as high as 1.97% on Tuesday for the first time since Nov. 2019. 

The yield on the two-year note, which is more sensitive to interest rate expectations, reached 1.347 for the first time since February 2020. 

Markets are pricing in more than a 70% chance of a 25 basis point hike and a nearly 30% chance for a 50 basis point hike when U.S. policymakers meet in March, according to CME’s FedWatch Tool. 

The dollar index, which gauges the greenback against six major peers, edged 0.02% higher to 95.614, after bouncing off a 2-1/2-week low of 95.136 reached Friday. It touched the highest since June 2020 at 97.441 at the end of last month. 

Full coverage: REUTERS 

Oil Prices Nudge Up After API Data Shows Surprise Drop In U.S. Stocks

Oil prices nudged up on Wednesday following two sessions of losses after industry data showed an unexpected drop in U.S. crude and fuel stocks, offsetting concerns of a possible rise in supplies from Iran. 

Brent crude futures rose 23 cents, or 0.3%, to $91.01 a barrel by 0122 GMT, while U.S. West Texas Intermediate crude was at $89.47 a barrel, up 11 cents, or 0.1%. 

“Undersupply is the key factor that has pumped up the oil price,” said Tina Teng, an analyst at CMC Markets. 

U.S. crude, gasoline and distillate stocks fell last week, according to market sources citing American Petroleum Institute figures on Tuesday. Crude inventories fell 2 million barrels, according to API, versus analysts’ expectations of a 400,000-barrel increase. 

More data from the U.S. EIA will be available at 10:30 a.m. EST (1530 GMT). 

Still, concerns about a possible Iran nuclear deal that could unleash more oil into global markets weighed on prices. 

Brent and WTI slid about 2% on Tuesday, down for a second straight session, as Washington resumed indirect talks with Iran to revive a nuclear deal. Such a deal could lift U.S. sanctions on Iranian oil and quickly add supplies to the market, although a number of vital issues still need to be ironed out. 

“With the negotiations ongoing, the oil price is likely to lose steam in the next week, despite the bump higher we’ve seen today,” Teng said, adding that there has also been some profit taking among investors who have turned cautious after prices hit more than 7-year highs. 

Full coverage: REUTERS