Several key Asian share benchmarks fall on patient approach to rate cuts

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Several key Asian share benchmarks fell on Thursday as markets digested the implications of policymakers in major economies preferring to take patient approach to monetary easing amid sticky inflation.

MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.57 per cent. Australia's S&P/ASX 200 index was one of the biggest decliners, slumping 0.8 per cent, also hurt by a pullback in some commodity prices.

Geopolitical tensions also kept investors nervous as China's military started two days of "punishment" drills held in five areas around Taiwan just days after new Taiwan President Lai Ching-te took office. But Taiwan's stock market was not too fussed and was last up 0.3 per cent.

More hawkish-than-expected minutes of the Federal Reserve's latest policy meeting, a hot UK inflation print and a sobering assessment of New Zealand's inflation problems from the country's central bank have caused investors to pare their bets of the pace and scale of global rate cuts expected this year.

"One thing that's interesting from the last 24 hours that can be taken away is still the uncertainty from central banks about policy settings and at what levels interest rates have to be at, and where they need to potentially stay at, in order to tame inflation" said Kyle Rodda, senior financial market analyst at Capital.com.

"That's causing uncertainty from a policy point of view, but it's obviously also causing uncertainty from a market point of view."

US futures meanwhile received an early boost after AI darling Nvidia forecast quarterly revenue above estimates after the bell on Wednesday, which sent its shares jumping 5.9 per cent in extended trade.

S&P 500 futures tacked on 0.3 per cent, while Nasdaq futures gained 0.57 per cent in Asia trade.

Japan's Nikkei rose 0.6 per cent, drawing some support from a weaker yen that touched its lowest level in over three weeks. It was last at 156.85 per dollar.

Sterling and the kiwi held near two-month highs and last bought $1.2721 and $0.6102, respectively.

Data on Wednesday showed inflation in Britain eased less than expected and a key core measure of prices barely dropped, prompting investors to pull bets on a Bank of England rate cut next month.

Earlier that day, the Reserve Bank of New Zealand wrongfooted markets by warning cuts were unlikely until far into 2025 at the conclusion of its policy meeting where it held its cash rate steady as expected.

"There are still 'hard yards' to be done to bring annual CPI inflation down to the 2 per cent target midpoint in a timely and sustainable manner, and thus monetary policy easing remains unlikely this year," said Kelly Eckhold, Westpac chief economist for New Zealand.

"Our baseline view remains that the first 25bp policy easing will occur in February next year, to be followed by a series of gradual (once a quarter) 25bp reductions that will eventually lower the OCR to around 3.75 per cent in 2026."

Elsewhere in Asia, Hong Kong's Hang Seng Index ran into profit taking and fell 1.5 per cent, after having touched an over nine-month high at the start of the week.

China's blue-chip index eased 0.3 per cent.

Gold dipped 0.25 per cent to $2,372.28 an ounce, away from its record high of $2,449.89 hit on Monday, as the prospect of higher-for-longer US rates took some shine off the yellow metal. 

Oil prices likewise fell, with brent crude down 0.82 per cent to $81.23 a barrel, while US crude edged 0.9 per cent lower to $76.87 per barrel.