Wednesday, March 29, 2023

Asian stocks fall on fears of Ukraine and panic on Fed

An electronic stock quotation board is displayed inside a conference hall on November 1, 2021 in Tokyo, Japan. REUTERS/Issei Kato

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HONG KONG, Jan 25 (Reuters) – Asian shares and US futures fell sharply on Tuesday, with investors panicking about the prospect of a military conflict in Ukraine and the timing and pace of rate hikes ahead of a major Federal Reserve meeting. could indicate. ,

The benchmark slipped with the biggest losses in afternoon trade. MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 1.43% to its lowest in a month. The Nikkei (.N225) closed down 1.66%, having previously touched its lowest level since December 2020.

After a volatile session on Wall Street that saw a late rally and a higher close, US stock futures fell. Nasdaq futures (.NQc1) declined 1.3% and the S&P500 E-Minis lost 0.95%%.

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But in Europe, it looked like selling pressure would ease across the region, with Euro Stoxx 50 futures up 1.16% and FTSE futures up 0.76%. It marked its worst day in 18 months, after falling 3.8% for the euro STOXX 600 (.STOXX) on Monday.

Tai Hui, Asia chief market strategist at JP Morgan Asset Management, said investors are facing a dilemma.

They said they are concerned about the monetary policy outlook in terms of some growth stocks becoming more expensive, while the growth outlook for 2022 is still good and there are some assets that offer long-term return potential like equities. are, he said.

“Geopolitical uncertainties in Europe this week and the potential impact on energy prices worsened the outlook,” Hui said.

NATO said on Monday it was keeping Eastern Europe on standby and fortifying with additional ships and fighter jets, in response to the build-up of troops along the border with Ukraine Russia denounced in the West. read more

Elsewhere in Asia, Korea’s KOSPI (.KS11) dropped 2.34%, while Hong Kong shares pared early losses but were still down 1.5%. The Australian benchmark (.AXJO) fell 2.68% to an eight-month low, which was also hurt by a higher inflation reading on Tuesday morning, which raised fears of a rate hike.

Keeping traders on their toes, the Federal Reserve will begin its two-day meeting later on Tuesday, with some investors beginning to speculate about the announcement of a surprise rate hike, though it is still viewed as a small possibility. is seen as.

“The big question mark is about the pace of the Fed hiking cycle – as the central bank seeks to stem the rise in inflation – and the impact on equity markets,” said Prashant Bhayani, chief investment officer for Asia at BNP Paribas Wealth Management. In a note to customers.

The Fed’s toughness is pressing some central banks in Asia to follow suit, potentially hurting their equity markets as it did in 2013 when the US central bank cut its post-financial crisis stimulus. began to decrease.

Singapore’s central bank on Tuesday tightened monetary policy in an out-of-cycle move. read more

“The good news is that, overall, the current account balance in Asia is healthy compared to the taper tantrum in 2013,” Bhayani said.

US benchmark Treasuries were dismissing some speculation of a rate hike. Yields on the benchmark 10-year notes eased slightly to 1.7618%, near where they started trading on Monday.

In currency markets, panic pushed the dollar higher against most peers. The dollar index was at 96.010, hovering near a two-week high, and the risk-favourable Australian dollar briefly edged higher after higher inflation data. FRX

China’s yuan is hovering at a 3-1/2-year high against the dollar, while its value against major trading partners has reached its strongest level since late 2015.

Oil prices also rose, adding to the concerns of stock investors. US crude was up 0.4% at $83.63 a barrel and Brent crude was up 0.55% at $86.75.

Gold held on to recent gains as investors sought protection. The spot price, at $1,842 an ounce, was flat on the day, but was close to last week’s two-month high of $1,847.7.

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Reporting by Selena Lee; Additional reporting by Alun John; Editing by Edwina Gibbs

Our Standards: Thomson Reuters Trust Principles.


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