Asian equities, dollar hunt as investors watch Fed policy

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Pedestrians wearing face masks walk near an overpass with an electronic card showing stock information, following a coronavirus disease (COVID-19) outbreak, in Lujiazui Financial District in Shanghai, China, 17 March 2020. REUTERS / Aly Song

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  • Asian equity markets:
  • Nikkei down 0.9%, trading resumes after the holidays
  • Futures are aiming for a stable opening for European stocks
  • Traders brace for US inflation data

SINGAPORE, Jan 11 (Reuters) – Asian equities and the dollar struggled to find direction on Tuesday as investors waited for Federal Reserve Chairman Jerome Powell to appear before the Senate Banking Committee, hoping for clues about the timing of the expected policy tightening. .

Powell is seeking a second four-year term as head of the Fed, and his appearance before the committee will be followed by a hearing with candidate for vice president Lael Brainard on Thursday. to know more

EUROSTOXX 50 futures rose 0.6% and FTSE futures gained 0.3%, indicating a company open to European equity markets.

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Global markets have been on the verge of inflation risk, but Hou Wey Fook, chief investment officer of DBS Bank, said he did not believe inflation was in a “flight situation”.

“There are many short-term drivers like the global supply chain and the reopening of economies,” said Hou.

“Once we have some normalization of these things, inflation should return to more reasonable levels and the Fed will probably not be too aggressive,” he said.

The broader MSCI index of Asia Pacific equities outside of Japan (.MIAPJ0000PUS) was up 0.2% after falling a whopping 0.3%.

The Nikkei (.N225) index fell 0.9% after trading resumed after a Monday holiday. Australian stocks (.AXJO) lost 0.8%, Taiwan (.TWII) gained 0.3% and Seoul (.KS11) remained stable.

Hong Kong (.HSI) posted a 0.1% increase and the Chinese 300 Index (.CSI300) lost 0.8%.

US consumer inflation data for December will be released on Wednesday, with the main CPI seen hitting a sizzling 7% year-on-year, raising the possibility of interest rates rising sooner rather than later.

The S&P 500 and Nasdaq futures have changed little.

The Fed signaled plans to tighten policy faster than expected in December, with a rate hike perhaps as early as March.

But that happened before it became clear how quickly the Omicron variant would spread, with hearings this week the first opportunity for Powell and Brainard to say how the current outbreak of the disease has affected their outlook. to know more

“We continue to believe that takeoff in March is increasingly likely. How these debates are resolved will likely have implications for post-takeoff rate hikes,” Nomura economists said in a report, referring to US monetary policy. .

“In particular, we believe that comments regarding the previous outflow and less aggressive rate hikes support our view that the Fed will slow the pace of rate hikes to two per year in 2023.”

Asian equities have fared relatively better this year so far. The MSCI’s key benchmark remained stable, with gains seen in Indian and Hong Kong stocks, while the Japanese and Chinese markets fell.

US equities had a bad first week of the year as the Fed signaled it would tighten policy more quickly to tackle inflation and thus the data showed a strong US labor market.

On Monday, the Dow Jones Industrial Average (.DJI) lost 0.45% and the S&P 500 (.SPX) lost 0.14%. Tech stocks staged a late recovery leaving the Nasdaq Composite (.IXIC) up 0.05%.

On Tuesday, the dollar index, which measures the currency against six counterparties, hovered around 95.832.

It hit a more than 16-month high of 96.938 on Nov.24 amid mounting aggression from Fed policymakers, but has since stuck between that level and 95.544, hit less than a week later.

US 10-year Treasury bond yields hit a high of 1.8080% in US trade, last seen in January 2020. The yield then fell to 1.7640.

Oil prices rose on Tuesday after two days of losses. Brent crude futures rose 0.5% to $ 81.3 a barrel after falling 1% in the previous session.

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Reporting by Anshuman Daga; Editing by Ana Nicolaci da Costa and Simon Cameron-Moore

Our Standards: Thomson Reuters Trust Principles.


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