Asia markets fall after U.S. inflation comes in hotter than expected

Indian billionaire Gautam Adani says the recent market volatility of his group's stocks are "temporary" and attributed the ports-to-energy conglomerate's success to its "strong governance" and "strict regulatory compliance."

"The current market volatility is temporary," Adani said, in the quarterly earnings release of Adani Enterprises on Tuesday.

Shares of Adani Enterprises were up about 3% Wednesday on National Stock Exchange of India.

The flagship Adani Enterprises reported profit-after-tax of nearly $100 million for the October to December quarter. That's compared to a loss of $1.5 million in the same period a year ago. 

Total revenue grew 42% to $3.3 billion on strong performance in its airports, coal trading and new energy businesses.

— Sumathi Bala

Ratings agency Fitch slashed Pakistan's long term foreign currency issuer default rating to CCC- from CCC+, pushing it further into junk territory.

According to its ratings scale, ratings of CCC "denote a very high level of default risk relative to other issuers or obligations in the same country or monetary union."

The Fitch report cited factors, including a sharp deterioration in external liquidity and funding conditions, a decline of foreign-exchange reserves to critically low levels, and large refinancing risks for Pakistan.

However, the report also noted that the country is committed to servicing its debt, adding that prime minister Shehbaz Sharif also expressed the intention to remain current on all debt obligations.

— Lim Hui Jie

Shares of Australia's Fortescue Metals fell 1.13% on Wednesday after the company reported lower profit and dividends for the June - December 2022 period and flagged persistent inflationary pressures.

Meanwhile, the company said it expects solid iron ore demand this year from China.

Net profit after tax came in at $2.36 million, 15% lower than the $2.78 million recorded in the same period a year ago.

Dividends also fell to 76 Australian cents, down 13% compared to the 85 Australian cents paid out for the June - December 2021 period.

— Lim Hui Jie

Gold prices could surpass $2,000 by the end of the year amid a weakening U.S. dollar, UBS Global Wealth Management's commodity, rates, and FX analyst Wayne Gordon said.

"We think that the dollar is on a trend weakness now as we go forward into 2024. And in that context, gold has been and will continue to be a very good hedge against that dollar weakness," Gordon told CNBC's "Squawk Box Asia" on Wednesday.

To push gold to "new record levels" of $2,100 and above, the U.S. Federal Reserve needs to start cutting interest rates, he said, adding that the Fed could turn dovish in the third quarter and cut rates by year-end.

Gold prices stood at $1,856.30 during Asia's afternoon trading session.

— Charmaine Jacob

Setting Singapore's budget was "particularly challenging" this year as it was "a very delicate balancing act," Deputy Prime Minister Lawrence Wong told CNBC in an exclusive interview.

Singapore's weak fiscal position along with citizens wanting support as cost-of-living rises are some pressures the country faces, said Wong, also the country's finance chief.

He said while Singapore's economy has recovered to pre-Covid times, it is "still quite weak." But rising costs also mean Singaporeans want more measures to cope with inflation, he said.

The Straits Times Index fell 0.9% while DBS Bank and OCBC Bank dropped 0.86% and 1.08% respectively as of Wednesday 12pm local time.

To help support households and business, the government on Tuesday pledged another S$3 billion ($2.26 billion) on top of the previous S$8 billion support package in 2022.

— Sheila Chiang

China's central bank has kept its interest rates unchanged at 2.75% on 499 billion yuan of one-year medium-term lending facility loans.

In a statement, the People's Bank of China said this was to "keep the liquidity of the banking system adequate at a reasonable level", adding that this fully met the needs of financial institutions.

The yuan weakened slightly against the US dollar to trade at 6.84.

— Lim Hui Jie

Consumer and healthcare names led the losses in the Hang Seng index.

ANTA Sports Products fell 4.5%, Alibaba Health Information Technology shed 4.2% and Hansoh Pharmaceutical Group lost 3.4% in its first hours of trade.

Country Garden Services Holdings also lost nearly 5%.

HSI hovered around the lowest levels that it's seen since early-January, having dropped nearly 5% month-to-date.

– Jihye Lee

Shares of Australian banks fell as Reserve Bank of Australia governor Philip Lowe highlighted inflation remains at elevated levels, speaking at the Senate Economics Legislation Committee.

"Inflation at the moment, 7.8%, is way too high, it needs to come down," he said, adding that the consumer price index is the central bank's "primary consideration."

Shares of Commonwealth Bank of Australia traded 5.8% lower, Westpac Banking Corp shed 4.6%, National Australia Bank fell 4.7%.

– Jihye Lee

Shares of Taiwan Semiconductor Manufacturing dropped 2.94% after veteran investor Warren Buffett sold off a significant portion of Berkshire Hathaway's holdings in the company.

Buffett acquired 60 million shares worth $3.33 billion in the third quarter, causing shares to jump 10% at the time. The latest filing shows Berkshire holds roughly 86% less than what it held previously.

Shares of TSMC are currently up 18.17% compared to the start of the year.

CNBC Pro subscribers can read more here.

— Lim Hui Jie, Yun Li

South Korea's unemployment inched lower to 2.9% in the month of January, government data showed, after marking 3.3% in December.

The economy added 411,000 new jobs for the month from a year earlier, marking a 1.5% increase on an annualized basis.

– Jihye Lee

Ten Japanese financial institutions are preparing to extend emergency loans of 400 billion yen ($3.01 billion) to electric services company Tokyo Electric Power (TEPCO), Nikkei reported.

The lenders include banks like Sumitomo Mitsui Banking Corp and Mizuho Bank, and comes amid high fuel costs and a weak yen that has hit the country's utilities sector.

Nikkei said the plan is still being finalized, but it includes about 90 billion yen from the state-backed Japan Development Bank, 83 billion yen from Sumitomo Mitsui Banking, 62 billion yen from Mizuho Bank and 39 billion yen from Nippon Life Insurance.

TEPCO could receive the loans as early as April.

Shares of TEPCO traded 0.65% lower, while shares of Sumitomo Mitsui Financial Group - which holds SMBC - climbed 0.94% and Mizuho Bank shares rose 1.11%.

— Lim Hui Jie

Shares of Samsung Electronics was little changed after it disclosed in a filing plans to borrow 20 trillion won ($15.78 billion) from its affiliate Samsung Display.

Its share price fell 0.16% in Seoul's first hour of trade, paring some of the gains seen in the previous session.

Samsung said that the amount will be used as operational funds and plans to borrow the funds at an interest rate of 4.60%.

– Jihye Lee

Stocks are see-sawing.

As sentiment turns a little bearish, BofA screened for cheaper global stocks that proved resilient during the financial crisis of 2008.

CNBC Pro subscribers can read about four of them here.

— Weizhen Tan

U.S. stock indexes are posting smaller gains this month, as market sentiment turns more bearish. But fund manager Barbara Doran is taking a contrarian view, telling investors to "ignore the noise."

Pro subscribers can read more here.

— Zavier Ong

The consumer price index, a widely followed inflation metric, rose slightly more than expected last month, thanks in part to rising gas and fuel prices.

The index rose 0.5% month over month, which translated into an annual gain of 6.4%. Economists polled by Dow Jones had been looking for respective increases of 0.4% and 6.2%.

Excluding volatile food and energy, core CPI increased 0.4% monthly and 5.6% from a year ago, against respective estimates of 0.3% and 5.5%.

The December number was also revised to a 0.1% gain. Originally, the BLS reported a 0.1% decline.

Before the number was released, JPMorgan's trading desk predicted that an annual increase of 6.4% to 6.5% would trigger an S&P 500 loss of about 1.5% on Tuesday.

So far, stock futures were taking the number in stride. The number was better than worst fears of a 6.5% or greater annual increase, an acceleration in inflation that would have triggered an S&P 500 decline of 2.5%, JPMorgan predicted.

— Jeff Cox

The Federal Reserve is still likely to cut interest rates later this year despite stubbornly high inflation, according to Jeremy Siegel, a finance professor at the University of Pennsylvania's Wharton School.

Although the consumer price index was up 6.4% on January — far above the Fed's target rate of 2% — Siegel said that the Fed's current rate hikes have already impacted prices, noting that it has been only 11 months since the Fed began its course of rate increases.

"Milton Friedman said 12-18 months before you can get any effect on prices," Siegel said on CNBC's "Halftime Report" on Tuesday afternoon. "We've had a lot of effects on prices in the first 12 months ... This is a long process, to be sure. And it's a process that the Fed has to let go through the market."

To be sure, the finance professor added that he is less certain about a rate hike following January's "unbelievable" jobs report.

"I do see a stronger economy than I saw four weeks ago," said Siegel. "That would mean, more likely that the Fed would not reduce the rate as fast in the second half in the year.

However, he believes that the odds of a rate hike remain more probable than not.

"I still think it is likely. More than 50%, that they will cut. Maybe I thought it was 80%, maybe now I think it's 50%.

He added, "I don't think anyone including the Fed knows, because they plan their increases or decreases policy 10–14 days in advance. All the further-out ones are totally data-dependent — on what they see."

— Hakyung Kim

Even though January's CPI report showed that inflation is slowing on the year, it likely wasn't enough to change the Federal Reserve's course of interest rate hikes, according to Anthony Saglimbene, chief market strategist at Ameriprise.

He said that investors should expect the central bank to continue to raise rates from here, even if it's not what traders have been hoping for.

"The market still doesn't buy the idea Mr. Powell and company won't need to cut rates this year," he said. "And that's because investors fear growth may slow considerably by the end of the year and pressure the Fed to ease policy in an effort to help support the economy."

Still, the "verdict is still out on that outlook," he said, adding that scenario could add risk for asset prices.

"In a nutshell, the mixed dynamics around rates, monetary policy, and the growth outlook had traders taking a breath last week and moving some of their chips to the side ahead of this week's January CPI report," he said.

—Carmen Reinicke

New York Federal Reserve President John Williams expressed confidence Tuesday in the progress made against inflation though he said the central bank's work isn't finished.

"When it comes to monetary policy, we must restore balance to the economy and bring inflation down to 2% on a sustained basis," Williams told a bankers group gathered in New York. "I am confident that the gears of monetary policy will continue to move in a way that will bring inflation down to 2%. We will we stay the course until our job is done."

He noted several factors that are complicating the inflation fight, such as rebounding economic growth in Europe and China. Also, he noted that after progress had been made in unclogging global supply chains, it has stagnated in recent months.

Services excluding food, energy and shelter, or "super-core" inflation, also has stayed elevated.

"So, our work is not yet done. Inflation is still well above our 2 percent target, and it is critically important that we reach that goal," Williams said.

—Jeff Cox