SYDNEY, NSW, Australia - Continued concern over inflation kept investors at bay in Japan and Australia on Wednesday, although sharemarkets in Hong Kong and China appeared to be heading for a positive close.
Inflation data coming out of the U.S. later Wednesday unnerved investors.
Annual inflation in the U.S. was rising at 2.6 percent in April with the consensus expecting to see an increase to 3.6 percent in May. The bond market was likely to react strongly if it misses and even stronger if it beats this estimate.
"If you see U.S. inflation at 4 percent, markets would become a little unstuck," investment strategist at Nomura Australia, Andrew Ticehurst told The Sydney Morning Herald on Wednesday
"U.S. equity markets and the Australian dollar would fall quite sharply and the U.S. Dollar would rise," he said.
In Tokyo, the Nikkei 225 shed 461.08 points or 1.61 percent to 28,147.51.
In Australia, the big news was an announcement overnight, via the delivery of the 2021/22 Budget that international borders in Australia will remain closed until at least mid-next year. The shares of the national carrier Qantas dived 3.40 percent on the news, settling at $4.50 a share.
The All Ordinaries declined 50.50 points or 0.67 percent to 7,281.10.
China's Shanghai Composite, going against the regional trend, edged up 20.91 points or 0.61 percent to 3,462.75.
In Hong Kong, the Hang Seng added 217.23 points or 0.78 percent to 28,231.04.
The U.S. dollar traded a little higher in Asia on Wednesday. The euro however inched up to 1.2141. The British pound was in demand, albeit a little softer at 1.4145. The Japanese yen slipped a tad to 108.74. The Swiss franc eased to 0.9036.
The Canadian dollar was little changed at 1.2087. The Australian dollar dropped to 0.7814. The New Zealand dollar softened to 0.7244.
Overnight on Wall Street, the Dow Jones index finished with a deficit of 473.66 points or 1.36 percent at 34,269.16.
The Standard and Poor's 500 cut loose 36.33 points or 0.87 percent to close at 4,152.10.
The Nasdaq Composite ended down 12.43 points or 0.09 percent at 13,389.43.