SINGAPORE (Reuters) – Asian equities fell on Tuesday, pulling back from record highs as long-standing concerns over possible roadblocks to the Biden administration’s $ 1.9 billion stimulus outweighed sentiment, driving US Treasury yields down to three weeks lower .
The lower risk appetite gave the dollar some support against a basket of currencies, while oil prices fell.
EUROSTOXX 50 futures traded down 0.1%, while FTSE futures added 0.03%, indicating a mixed opening for European stock markets. E-Mini futures contracts for the S&P 500 ESc1 fell 0.5%.
In a sea of red seen across the markets, South Korea and Hong Kong were at the top of losers and they each fell by more than 2%, Japan slipped by 0.9% and Chinese shares by 1.6% % increased. Everyone hit milestone highlights earlier this month.
“There have been some warning bells from different parts of the world as we have seen more closures in Europe, the US and Asia,” said Vasu Menon, senior investment strategist at OCBC Bank Wealth Management.
MSCI’s largest Asia-Pacific stock index outside Japan rose 1.5% to 717.3 on Monday, but was not far from a record high on Monday and has risen 8% so far this year. The index was on track to record its biggest decline since the end of November.
“You have to see the delivery spread to the economic data, the earnings and enough vaccines,” Menon said, adding that uncertainty over the timing of the U.S. stimulus package is hurting market sentiment.
Simmering tensions in Taiwan Strait and the South China Sea have also contributed to the reasons for caution in Chinese markets, where a jump in small-cap small-scale betting has also caught regulators’ attention.
A flood of money supply, ultra-low or no interest rates and COVID-19 vaccine vaccination have caused a “buy it all” march in recent months.
Some investors – pointing to rising prices of assets such as bitcoin or Monday’s rising share price of retail video game retailer Gamestop – are starting to worry that markets are entering the bubble area.
U.S. lawmakers agreed that obtaining COVID-19 vaccines should be a priority for Americans, even if they include horns above the size of a pandemic relief package.
Disagreements have meant months of indecision in a country that suffers more than 175,000 COVID-19 cases a day with millions of unemployed.
On Monday, the Nasdaq index hit a new high, but the Dow Jones industrial average slipped. [.N]
“We suspect that revenue may not be able to catch up with what people expect this year,” said Jacob Doo, chief investment officer of Envysion Wealth Management, referring to the exclusions in Europe and the slow rollout of vaccinations in the United States.
“Within the technological space, we are now cautious with CATCH, simply because there may be antitrust laws that Biden will implement,” Doo said.
The focus will also shift to the Federal Reserve’s meeting of the Federal Open Market Committee on Tuesday and Wednesday.
“We expect the January FOMC to reiterate and reinforce the Fed’s current dovishness, which remains important given the recent taper talks and the consideration of other central banks to adjust their policies,” said EXhim Rahbari, FX strategist at CitiFX, said in a report.
The dollar rose to a one-week high against a basket of currencies as stock volatility slumped investors’ appetite for riskier currencies. The euro fell to $ 1.2127. [USD/]
U.S. Treasury yields for ten years dropped a fraction to move back to the three-week low Monday, last trading at 1.0381%. [US/]
Brent crude fell 0.7% to $ 55.50 a barrel and rose nearly 1% on Monday. [O/R]
Reporting by Anshuman Daga; Edited by Shri Navaratnam and Richard Pullin