Business News
Kevin Buckland
Elizabeth Dilts Marshall
TOKYO / NEW YORK (Reuters) – Asian stocks fell on Wednesday and followed on Wall Street as investors waited to see if the US Federal Reserve would point a faster path to policy normalization than previously expected.
The US Federal Reserve ended a meeting two days later in the day.
An index of local equities excluding Japan retreated 0.5%, led by declines in South Korea’s Kospi.
The Shanghai Composite Index lost 0.3% and Hang Seng in Hong Kong 0.3%.
The Japanese Nikkei 225 was flat to slightly lower, while the broader Topix index rose the trend to 0.1%.
European equities would start weaker, with Euro Stoxx 50 futures in the region up 0.1%. FTSE futures contracts also rose lower in early transactions.
Global markets have been hampered in recent weeks by a upturn in the treasury that has boosted yields by more than a year, as bond investors bet the rapid COVID-19 vaccinations and massive fiscal stimulus would grow and spur inflation faster than expected. in the world’s largest economy.
The volatility has led to speculation that the Fed may be forced to make a technical adjustment to the levers that control its interest rate, but few expect the central bank to act at this meeting, even as it announces more rosy growth prospects. .
“We expect (Chairman Jerome) Powell to note that the FOMC has the tools to intervene if the bond market becomes disorderly or restricts economic recovery,” Commonwealth Bank of Australia analysts wrote.
“But we expect Powell to back down from discussing policies because of the great weakness in the labor market … US yields and the dollar could jump if the FOMC statement and Powell’s statement are not considered dull enough.”
The benchmark ten-year treasury yields continued to consolidate around 1.6% and stood at 1.6268% in Asia on Wednesday. They reached 1.6420% on Friday for the first time since February last year.
An index that tracks the dollar against six major peers held around 91.90 after its pullback from a three-month high of 92.506 hit last week.
The caution of the foreign exchange market could stretch all week, with the Bank of England announcing its policy decision on Thursday, and the Bank of Japan will draw up a policy review on Friday in which it could phase out a numerical target for buying assets.
On Tuesday, the Dow Jones Industrial Average fell 0.39%, while the S&P 500 lost 0.16%. The Nasdaq Composite was up 0.09%.
E-mini futures contracts for the S&P 500 fell 0.04% on Wednesday.
Gold prices have risen at their highest point in more than two weeks with a view to higher inflation.
Spot gold rose 0.3% to $ 1,736.55 per ounce.
Brent crude futures rose 33 cents to $ 68.72 a barrel and U.S. crude futures added 40 cents to $ 65.20 a barrel.