Asian stocks plunge on Fed hawkish remarks; the risk of recession weighs on commodities, oil

HONG KONG, Jan 10 (Reuters) – Asian stocks fell on Tuesday, commodities lost recent gains from reopening China and oil traded lower following hawkish comments from two Reserve officials federal government overnight as investors turned cautious ahead of key inflation data.

MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) fell 0.17%.

“The main theme overnight was caution in the equity space as stocks pared gains after hawkish comments from two Fed officials. Raphael Bostic and Mary Daly said the Fed would likely raise rates ( interest rate) above 5% and keep them there for some time,” Commerzbank said in a client note.

The S&P500 Index (.SPX) started the week on a bullish note with an increase of more than 1.4% in early US trade on Monday before giving up all gains to close slightly lower.

US Treasuries and the US dollar remained under pressure, with the yield on 10-year US Treasuries rising slightly on Tuesday by 2.23 basis points to 3.5393%, from 3.517% on Monday evening.

The dollar index remained stable.

“Sentiment could turn more cautious ahead of the US CPI (consumer price index) release on Thursday, mitigating ‘risk on’ trades initiated due to optimism around China’s reopening,” said Mizuho Bank said in a note.

If U.S. consumer price data confirms the cooling seen in the latest monthly jobs report, Fed Bank of Atlanta President Bostic said he should take a hike of a quarter point “more seriously and move in that direction”. Read more

Chinese stocks snapped a six-game winning streak on Tuesday, while Hong Kong stocks hit a six-month high. However, any optimism may be short-lived, said Trinh Nguyen, emerging Asia economist at Natixis in Hong Kong.

“I think what would temper a lot of that optimism going forward is really the reality of this opening up. Even in Hong Kong, although it’s officially open, visa issuance has been pretty slow,” he said. said Nguyen.

China’s benchmark index (.CSI300) edged higher from previous losses to gain 0.15%, while losses for Hong Kong’s Hang Seng Index (.HIS) narrowed to 0.15% .

Prices for most base metals fell on Tuesday after recent rebounds driven by the reopening of China’s main consumer, as traders weighed the risks of a global economic slowdown and weak consumption.

Three-month copper on the London Metal Exchange was down 0.8% at $8,786 a tonne, by 0422 GMT. Copper prices hit their highest level in more than six months on Monday, while zinc climbed 5% on Monday to its highest level since Dec. 15.

The Japanese Nikkei (.N225) rose 0.35%, bucking the regional trend.

Core consumer prices in Tokyo, released on Tuesday, rose faster than expected by 4.0% in December from a year earlier, underpinning market expectations that the Bank of Japan could phase out its massive stimulus package by adjusting its yield curve control policy. Read more

In Australia, shares (.AXJO) lost 0.28%.

Oil fell slightly on Tuesday on expectations of further rate hikes from the Fed. Read more

U.S. crude fell 0.5% to $74.26 a barrel and Brent to $79.20, down 0.56%.

Gold prices rose slightly, adding 0.15% to $1,872.70 an ounce.

E-mini futures for the S&P 500 indicated a slow open with a decline of 0.17%.

Reporting by Selena Li; Editing by Muralikumar Anantharaman

Our standards: The Thomson Reuters Trust Principles.

Leave a Reply

Your email address will not be published. Required fields are marked *