Asia-Pacific markets set to trade cautiously ahead of U.S. inflation data

SINGAPORE — Asia-Pacific markets were set to trade cautiously on Friday as investors assess risks associated with the new omicron Covid variant and look ahead to key inflation data in the U.S.

Futures pointed to a lower open in Japan where the benchmark Nikkei 225 dipped 0.47% in the previous session.

Australian shares began the trading day on the backfoot. The ASX 200 fell 0.32% after market open, with the energy subindex dropping 1.01% on the back of overnight decline in oil prices.

Energy names in Australia sold off: Santos shares fell 0.76%, Oil Search was lower by 0.72% and Woodside Petroleum declined 1.08%.

Friday's session in Asia follows overnight declines on Wall Street.

"In truth the more cautious tone in risk market probably has as much or more to do with apprehension ahead of tonight's US CPI report," Ray Attrill, head of foreign-exchange strategy at the National Australia Bank, said in a morning note.

Stateside, the Labor Department is set to release November's consumer price index Friday morning local time, which measures the cost of dozens of items.

Estimates suggest the reading could mark its highest year-over-year level since 1982.

While the jump in inflation is hardly news to the market, investors will look to see how hot the level is and what kind of a reaction that might trigger from the U.S. Federal Reserve.

In the currency market, the U.S. dollar last traded at 96.271 against a basket of its peers.

The Japanese yen changed hands at 113.44 while the Australian dollar was relatively flat at $0.7145.

Oil prices settled lower overnight, with Brent down 1.9% at $74.42 a barrel and U.S. crude down 2% at $70.94.