BENGALURU: Asian stocks slipped on Friday after an above-forecast US producer price print tempered expectations for a Federal Reserve rate cut, bolstering the dollar and weighing on regional currencies.
Stock markets in Malaysia and the Philippines fell 0.4% and 0.2% each, while Singapore slipped 0.9%. The MSCI gauge of Asian emerging market equities fell 0.3%.
“ASEAN markets are unlikely to sustain their recent advances because lower inflation and interest rates, US dollar weakness have yet to translate to an improving growth outlook,” said Alan Richardson, senior portfolio manager at Samsung Asset Management.
US producer prices rose more than expected in July, data overnight showed, dampening hopes of a jumbo Federal Reserve rate cut in September and denting risk appetite in regional markets.
A softer consumer inflation print earlier this week had boosted expectations of policy easing in the world’s largest economy and lifted risk assets across the board.
The dollar index steadied and held onto previous session gains after the inflation data, keeping Asian currencies under pressure. The Philippine peso slipped 0.2%, and the Taiwan dollar similarly dipped 0.2% to its lowest level since late-May, while most other regional currencies were little changed.
“EM Asian currencies could be under pressure somewhat in the near-term but will likely regain some strength going forward especially in the fourth quarter and first quarter of 2026,” said Poon Panichpibool, markets strategist at Krung Thai Bank, pointing to potential dollar weakness after the Fed’s policy path becomes clearer.
