Asian stock markets mostly slid on Sunday as investors waited for the U.S. inflation data that could influence the global interest rate outlook.
MSCI's broadest index of Asia-Pacific shares, excluding Japan, hit 539.59, losing 2.08 points or 0.38 percent. The index posted a weekly loss of 2.2 percent in the previous trading week.
Japan's Nikkei 225 index closed at 27,427.32, falling by 243.66 points or 0.88 percent. South Korea's KOSPI declined by 0.69 percent or 17.03 points to close at 2,452.70. Hong Kong's Hang Seng index lost 0.12 percent or 26 points, concluding the trading session at 21,164.42.
China's blue-chip stock index was one of the few gainers of the day, increasing by 37.26 points or 0.91 percent to close at 4,143.57.
Analysts said the January U.S. consumer price index (CPI) would determine the market direction in the near term. Based on median estimates, headline and core inflation rose by 0.4 percent for the month. Analysts also expected consumer spending to increase by 1.6 percent.
However, analysts warned of the upside risks of the calculation. For instance, the re-analysis of the CPI in November and December lifted the year-over-year quarterly core inflation to 4.3 percent after including seasonal factors. Housing costs and used car prices can also cause bias in the calculation, leading to higher CPI.
JPMorgan head of economic analysis Bruce Kasman said the strong job report in January likely inhibited the slowing pace of inflation. The bank predicted higher core inflation and consumer spending than the median, at 0.5 percent and 2.2 percent, respectively.
"Developed market labor markets have tightened in recent months against our expectations of easing," Kasman said. "The latest news reinforces conviction that we are not on a soft-landing path and that a recession will eventually be necessary to bring inflation back to central bank comfort zones."
The market now expects further rate hikes by the Federal Reserve, with the federal funds rate peaking at around 5.15 percent. Analysts also said that rate cuts might come in later than predicted.
In addition to CPI data, investors are also waiting for Fed officials' public appearances later this week. These officials will appear after the publication of CPI data on Tuesday morning.
Fed chairman Jerome Powell and several other officials already said the central bank planned to increase interest rates further in the coming months. However, analysts noted that Powell's remarks last week were less hawkish than anticipated.
Yields, dollar rise
The 10-year Treasury note yields hit five-week highs of 3.75 percent on Sunday. The note saw a 21-basis-point increase last week. Meanwhile, the two-year bond yields rose to 4.51 percent.
Bond yields movement stabilized the U.S. dollar index. The euro fell by 1.1 percent last week against the dollar, hitting a five-week low of $1.0656. The Eurozone currency traded at $1.0987 at the beginning of February.
The dollar also strengthened against the Japanese yen after reports said University of Tokyo professor Kazuo Ueda would replace Haruhiko Kuroda as the governor of the Bank of Japan. The news made investors speculate whether the BoJ's lax monetary policy would end soon.
The dollar increased by 0.3 percent against the yen to 131.76 after trading around the 129.80 level last week. The upward trends of yields and the dollar pushed down gold prices, which remained at $1,860 per ounce after hitting $1,959 per ounce in early February.
Oil prices also fell despite increasing significantly last week. Brent traded at $85.92 a barrel, falling by 47 cents. Meanwhile, the U.S. crude traded at $79.20, declining by 52 cents.