Asian stocks slip, dollar rally paused as Fed signals seen

SINGAPORE, Feb 21 (Reuters) – Asian stocks fell on Tuesday as the prospect that the U.S. central bank will need to stay on its hawkish course weighed on sentiment, as investors leaned on the minutes of the Reserve’s latest meeting federal government to obtain other monetary policy indices.

MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) slipped 0.7% to 529.97, hovering around six-week lows of 529.30 hit last week.

The index is down nearly 3% this month, after jumping 8.6% in January, as a string of robust US economic data bolstered fears that interest rates may have to rise further and stay higher for longer.

The market now expects U.S. interest rates to peak at 5.30% in July and stay above 5% by the end of the year, moving away from expectations of deeper rate cuts this year .

European stock futures indicated that stocks would fall, with Eurostoxx 50 futures down 0.14%, German DAX futures down 0.07% and FTSE futures down 0.07%. decrease of 0.13%.

“The backdrop of inflationary concerns in the US still maintains the risks of tighter than expected monetary policy, and yields remain a key priority as US markets return later in the day,” Saxo strategists said. Markets.

Latest updates

See 2 more stories

US markets were closed on Monday due to the President’s Day holiday. E-mini futures for the S&P 500 fell 0.45%.

The Japanese Nikkei (.N225) fell 0.24%, while the Australian S&P/ASX 200 Index (.AXJO) fell 0.21%.

Chinese equities were subdued, with the Shanghai Composite Index (.SSEC) marginally up 0.06%, while the Hong Kong Hang Seng Index (.HSI) fell 1.7%, as geopolitical worries as the first anniversary of the war in Ukraine approaches and doubts surrounding the Chinese economy’s recovery weighed on equities.

ActivTrades market analyst Anderson Alves said traders are talking about Chinese stocks outperforming this year due to its reopening efforts.

“However, it is worth keeping an eye on the geopolitical front, as the United States has warned of the consequences if China provides material support to Russia during the war in Ukraine.”

The yield on 10-year Treasury bills rose 2.3 basis points to 3.852%, after hitting a three-month high of 3.929% on Friday.

The yield on 30-year Treasuries rose 1.1 basis points to 3.899%, while the yield on two-year U.S. Treasuries, which generally moves in line with interest rate expectations, rose 3.5 basis points to 4.658%.

Investors are focused firmly on Wednesday’s release of the minutes of the Fed’s last meeting earlier this month, in which it raised interest rates by 25 basis points.

In the currency market, the dollar was just below recent highs as a three-week rally faded, with traders looking to European and US manufacturing data later on Tuesday and the PCE price index. Friday’s baseline to help guide their next steps. /FRX

DBS currency strategist Philip Wee said the market is bracing for another surprise in PCE data after strong US nonfarm payrolls and CPI readings this month.

The dollar index, which measures the U.S. currency against six other rivals, was last at 103.99, just below a six-week high of 104.67 hit on Friday.

The euro fell 0.11% to $1.067 and is expected to post four consecutive months of gains and end February lower.

The yen weakened 0.11% to 134.38 to the dollar, while the pound last traded at $1.2026, down 0.10%.

U.S. crude fell 0.08% to $76.28 a barrel and Brent to $83.01, down 1.26% on the day.

Reporting by Ankur Banerjee; Editing by Shri Navaratnam and Himani Sarkar

Our standards: The Thomson Reuters Trust Principles.

Leave a Comment