Asian stocks choppy as US inflation slows and dollar drops; Hong Kong shares down nearly 1%

Asian stocks struggled on Thursday, dragged by selling in Hong Kong tech shares, while the dollar was under pressure and short-dated bonds were firm as softening US inflation seemed to suggest the US rate hike cycle was nearing its end.

Early in the Asia day the euro hit a 2-1/2 month top at $1.10. Investors reckon Europe's central bankers will need to stay on the hawkish side for longer than their U.S. counterparts to rein in rising prices.

MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) slid 0.3 per cent, largely pressured by a 1.5 per cent drop in Hong Kong tech stocks (.HSTECH) in the wake of the Financial Times reporting SoftBank was selling down its Alibaba stake.

Alibaba shares (9988.HK) were down 3% in early trade and SoftBank (9434.T) shares flat and neither immediately responded to Reuters enquiries.

Japan’s Nikkei and South Korea’s Kospi was up marginally by around 0.1-0.2 per cent in the early trading session, while China’s Shanghai was flat with negative bias.

Overnight data showed U.S. consumer prices barely rose in March. The annual 5 per cent headline rise was the smallest since May 2021 and down from 9.1 per cent last June.

Minutes from the Federal Reserve's March meeting also showed some policymakers considered pausing hikes, before agreeing to last month's 25 basis point rise, with concerns centering on whether bank wobbles would cause a broader tightening in credit.

The dollar index is near a two-month low at 101.47. The dollar fell 0.4% to 133.19 yen overnight and dropped about 0.5% to $0.6694 per Aussie. The Aussie caught an additional boost from a bigger-than-expected jump in hiring in March, reaching $0.6710 by mid-morning.

Two-year Treasury yields dropped more than 8 bps and were then steady in Asia trade at 3.9662%. Fed funds futures imply about a 70 per cent chance that there's one more rate hike coming in May, followed by cuts nearer the end of the year.

Elsewhere oil prices held sharp gains made in the wake of the inflation data, with Brent crude futures steady at $87.22 a barrel. Gold held at $2.018 an ounce.

Shares of embattled Chinese property developer Sunac China (1918.HK) resumed trade after a more than year-long suspension in Hong Kong, with the company in the midst of a debt restructure. The stock was last down 45%.

With Reuters Inputs