Asian markets struggle to keep up momentum

Asia s stock markets struggled to carry recent gains into a fourth straight session on Wednesday while the U.S. dollar was steady as doubts about inflation and the drag from rate rises crept back into the global growth outlook.

MSCI's broadest index of Asia-Pacific shares outside Japan gave up earlier gains to trade around flat by mid-morning. Japan's Nikkei rose by 0.3%, while miners helped Australian shares rise by 0.7%.

Overnight Wall Street indexes had jumped and the dollar recoiled from near two-decade highs as investors worried about inflation and recession were pushed to the back of their minds. Analysts doubted it could last, and by the time Asian traders had woken up U.S. stocks had run out of steam. S&P 500 futures were down 0.2% early in the Asia session, while Nasdaq futures were down 0.4%.

After plunging into last week, shares could have a further bounce, said Shane Oliver, chief economist and head of investment strategy at Australia AMP Capital.

The war in Ukraine and Chinese growth are high and still point to more downside in share markets, he said.

The dollar was stabilising after an overnight kicking, helped by Australian wages data missing forecasts that pulled down the Aussie dollar.

The dollar was on a downward trajectory on the euro at $1.0536 and paused a strong bounce for sterling at $1.2480. The dollar index was at 103.370.

It's still too early to call a long term peak in the dollar and retracements should be shallow, according to analysts at Westpac. They added that there was a possibility of two-way consolidation between 102 and 104 being near-term, referring to the dollar index.

U.S. retail sales meeting forecasts for a solid increase in April and industrial production beating expectations had helped the short-term mood.

Data on Wednesday showed that Japan's quarterly was smaller than traders had feared.

The reminder from Federal Reserve Chair Jerome Powell that controlling inflation would cause inflation to rise and possibly cause some pain, however, was offset by the good news.

The benchmark Fed funds rate is expected to drop 3% by the end of the year, and investors have priced in 50 basis point U.S. rate hikes in June and July.

In anticipation of rising rates, tenors were sold overnight but the gap between short-dated and long-dated bonds is narrowing as markets price in the risk that the rate hikes this year will drag on longer-run growth.

The yield was just below 3% at 2.9805 and the benchmark 10 year Treasuries were steady in Asia.

European yields are rising as the likelihood of the European Central Bank hiking rates by 25 basis points around July is firm. Klaas Knot, the Dutch central bank chief, said overnight that a bigger rise shouldn't be ruled out.

Commodities have rallied with stocks this week as markets have found reasons to hold out of growth, but oil dipped overnight and there were signs of waning momentum on Wednesday.

The price of crude oil went up 0.3% at $112.29 a barrel, and the U.S. crude futures rose 0.8% to $113.35 a barrel.

S&P Global Ratings cut growth forecasts for China, the United States and the eurozone.

The global economy continues to face an unusually large number of negative shocks, according to chief economist Paul F. Gruenwald.

He said that two developments have altered the macro picture, namely Russia's invasion of Ukraine, which has sent commodity prices spiking and inflation, which has turned out to be higher, broader and more persistent than first thought.