Asian stocks fall, dollars fixed on bets on US rate hikes following Powell’s renomination

A man looks at an electrical board showing the Nikkei index outside a brokerage house in a business district in Tokyo, Japan, June 21, 2021. REUTERS / Kim Kyung-Hoon

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HONG KONG, NOVEMBER 23 (Reuters) – Asian stocks faltered on Tuesday, following a setback on Wall Street as traders strengthened their efforts on US interest rate hikes in 2022 after President Joe Biden elected Federal Reserve chief Jerome Powell to head the central bank for a second concept.

The London market pointed to a softer opening with FTSE futures of 0.21%, while the E-mini futures for the S&P 500 index remained unchanged.

MSCI’s target for Asia Pacific shares outside Japan fell 0.52%, while Hong Kong’s Hang Seng index fell 1%.

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China’s benchmark CSI300 indexed its morning losses to stay just above red, led by real estate stocks after Chinese banks were asked to issue more loans to real estate projects.

Australia’s S & P / ASX 200 gave better results, closing 0.79%, strengthened by miners and energy stocks. Japanese markets were closed due to a public holiday.

President Biden touched on Powell on Monday to continue as Fed leader, and Lael Brainard, the other top candidate for the job, as deputy leader. The news first supported Wall Street shares, before the market retreated into the afternoon with the S&P 500 and Nasdaq Composite shutting down from all-time highs. The dollar received solid support.

More risky assets have been shaken up again in recent sessions, amid growing COVID-19 cases in Europe and renewed curbs, weakening investors’ hopes for a faster improvement in consumption and growth worldwide.

Germany’s outgoing Chancellor Angela Merkel said the latest wave is the worst the country has experienced so far, while Austria entered a new blockade on Monday.

Powell’s current period, which has focused on creating jobs from the prominent focus on inflation, has proved positive for risk assets, with S&P receiving 69.7% since his appointment.

“The USD appears to be on the rise after the Powell renomination as it allows markets to flirt with the idea of ​​a faster loser,” said analysts at TD Securities in a note.

The US interest rate kept the dollar index well supported near a 16-month high. The dollar was also close to a 4-1 / 2-year high against the yen in early deals on Tuesday.

US government yields were led higher by two-year bonds, which usually move in line with interest rate expectations. It reached its highest level since the beginning of March 2020.

“The market expects a higher probability of an interest rate increase next year … it is generally expected (that we will) have a three to four times interest rate increase next year,” said Edison Pun, senior market analyst at Saxo Markets.

In commodities, spot gold rose 0.19% to $ 1,808.4 per ounce, as the pair lost Monday. Gold prices were under pressure when Powell’s nomination drove expectations that the central bank will keep the course on phasing out financial support.

Oil prices were down again after a brief recovery the day before from recent losses on reports that OPEC + could adjust its plans to increase oil production if large consumer countries release crude oil from their reserves or if the coronavirus pandemic dampens demand.

Brent oil was down 0.49% to $ 79.31 per barrel and US oil fell 0.7% to $ 76.21 per barrel within 0521GMT.

The US Department of Energy is expected to announce a loan of oil from the strategic petroleum reserve on Tuesday in coordination with other countries, Reuters reported earlier.

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Report by Kane Wu in Hong Kong Editing by Shri Navaratnam

Our standards: Thomson Reuters Trust Principles.

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