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Asian stock exchanges: Asian stocks are falling due to the aggressive possibility of a tightening of the Fed Nikkei fell almost 2%, Hong Kong moves away from its 1-month high China’s service activity is shrinking due to COVID research US yields are high for many years, strengthening the dollar
Asian stock markets slipped on Wednesday as investors faced the possibility of an aggressive monetary tightening by the US Federal Reserve to fight inflation, while also focusing on new Western sanctions against Russia for its invasion of Ukraine. US bond yields have been high for many years and stock markets were red as Fed Governor Lael Brainard said last night that he expected a combination of interest rate hikes and a rapid balance sheet to move US monetary policy to a “more neutral position”. »Later this year. . read more The Japanese Nikkei (.N225) fell 1.7%, while the broader Asia-Pacific Index outside Japan (.MIAPJ0000PUS) of MSCI fell 1.4%. Sign up now for FREE unlimited access to Reuters.com Register European markets also seemed to be opening lower. EUROSTOXX 50 futures decreased by 0.4% and FTSE futures remained stable. S & P500 futures fell 0.1%. The focus of investors on Wednesday will be the publication of minutes from the last Fed policy meeting, which will look for indications about the prospect of a 50 basis point increase at the next meeting of the US Federal Reserve in May. “At the moment there is an 80% chance the Fed will follow suit,” said Kyle Rodda, a market analyst at IG Melbourne. Investors had not fully appreciated such a move, so more data on it could move markets, Rodda added. “There is an expectation that the Fed could increase by 50 bps in June, and if that becomes more likely, then an adjustment to those risks could trigger another volatility in volatility,” he said. The yield on 10-year benchmark bonds rose to a three-year high of 2.631% on Wednesday as a bond sold after Brainard’s statements. The 2-year US yield rose to its highest level since January 2019 and the 5-year yield to its highest level since December 2018. China’s markets also drew attention as data released on Wednesday showed that activity in its services sector had shrunk at the fastest pace in two years in March as rising coronavirus infections reduced mobility and burdened customer demand, according to private sector research. read more Hong Kong Hang Seng Index (.HSI) lost 1.4% on its return from vacation, moving away from a month high on Monday, Chinese blue chips (.CSI300) lost 0.46%. On Tuesday, Chinese authorities extended the lockdown for COVID-19 in Shanghai to cover the financial center’s 26 million people despite growing anger over quarantine rules. read more The jump in yields after Brainard comments also took place in the foreign exchange market, providing support to the dollar. The dollar index reached 99,640, the highest since the end of May 2020 at the beginning of trade, also supported by the fall of the euro, which reached a one-month low of $ 1.0889, hurt by fears that more sanctions in Russia would hurt Europe’s economy. The United States and its allies will impose new sanctions on Russian banks and officials on Wednesday and ban new investments there, the White House said. read more The dollar also traded steady against the yen at 123.98 yen, given the Bank of Japan’s belief and repeated action last week to keep 10-year Japanese government bond yields below 0.25%. Rising bond yields worldwide have put pressure on gold, which has no yields. Gold spot fell 0.16% to $ 1,928.8 an ounce. Oil prices have recovered from early losses as the threat of new sanctions on Russia raised supply concerns, but there were fears of weaker demand following rising US crude stockpiles and a prolonged lockdown in Shanghai. US crude remained unchanged at $ 101.96 a barrel. Crude Brent crude was up 0.3% at $ 106.96 a barrel. Sign up now for FREE unlimited access to Reuters.com Register Report by Daniel Leussink. Additional Report by Alun John in Hong Kong Edited by Sam Holmes, Robert Birsel Our role models: The Thomson Reuters Trust Principles.
