BUSINESS

Asian stocks fall in the wake of Fed, BoE fuel uncertainty ahead of U.S. GDP data.

The risk of recession also increased worries about the demand for oil.

TOKYO (Reuters) Asian stocks were a part of Wall Street lower and bond yields were still low on Thursday, as investors considered the risk of a global recession amid the hawkish Federal Reserve rhetoric and uncertainty regarding the Bank of England’s commitment to stabilize markets.

The risk of recession also increased worries about the demand for oil as crude prices failed to rebound following the previous day’s decline of 2.

The dollar remained steady against major peers while traders waited for U.S. consumer price data which could shed light on speed of any more Fed loosening of policy.

The Japanese Nikkei (.N225) dropped 0.53 percent and South Korea’s Kospi (.KS11) fell 1.18 percent.

The Hong Kow’s Hang Seng (.HSI) dropped 1.02 percent, and the the mainland Chinese blue chip (.CSI300) fell 0.64 percent..

MSCI’s largest gauge comprised of Asia-Pacific shares (.MIAP00000PUS) declined 0.54 percent, slipping close to the previous day’s 2 1/2 year lowest.

The benchmark for Australia’s stock (.AXJO) is an anomaly, with an 0.1 percent gain, aided by the huge gains of Qantas (QAN.AX) following the airline announced that it is expected to make a profit in the first half of.

U.S. emini stock futures offer a little optimism, rising 0.1 percent following an 0.33 percent decrease within the S&P 500 (.SPX) from the previous overnight.

U.S. long-term Treasury yields were soaring near their lowest levels over the last two days, and were barely fluctuating at 3.9227 percent during Tokyo trading.

U.S. rates turned lower overnight, following minutes from Fed’s most recent policy meeting revealed that numerous members “emphasised the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action,” however, certain members of the committee suggested that it is crucial for them to “calibrate” the pace of additional rate hikes to limit the chance that they could have “significant adverse effects” on the economy.

Treasury yields sank following the minutes, reversed the earlier trend as investors focus upon the soft undertones the reduction of yields from near two-decade levels.

However, Fed governor Michelle Bowman struck a hawkish position in her speech on Wednesday, stating that if the high rate of inflation continues to rise, she will remain a proponent of the aggressive rate increases.

Markets are betting 90% for another 75 basis point rate increase in November against a 10% chance of a one-half-point hike.

Investors’ primary focus right now will be U.S. consumer price data scheduled later in the day.

The minutes from Wednesday are “not the dovish pivot some market participants are looking for,” Joseph Capurso, the head of international economics at Commonwealth Bank of Australia, wrote in a note to clients.

“A pivot will depend on the inflation data.”

Dollar index which measures the greenback’s performance against six of its major competitors, remained near mid-point of the range during the week, with little change at 113.27.

The U.S. currency remained close to a fresh high of 24 years for the yen, which was the overnight price of 146.98 The currency last changed hands at 146.85.

However, the dollar was not much different from sterling, which had rebounded quickly from a two-week low that was $1.0925 at the end of Tuesday. The last time it traded was $1.1086.

Benchmark 10-year gilt yields changed from a fresh 14-year high of 4.632 percent and ended at 4.429 per cent on Wednesday. with little change in the last session.

The Bank of England insisted that its emergency support for the bond market expires on Friday, in the manner originally announced, despite reports in the media of a continuation of assistance if needed.

BoE The BoE Governor Andrew Bailey had riled markets on Tuesday when he said British pension funds as well as other investors impacted by a decline in bond prices have until this date to resolve their issues.

“Volatility in UK markets – gilts and sterling – remains exceptional,” however “the reality is that (the BoE) will necessarily be in place if the markets demand,”Ray Attrill, the head of foreign exchange policy for National Australia Bank, wrote in a paper.

The crude oil market remain in a weak state. U.S. crude futures fell 7 cents to trade at $87.20 per barrel at the beginning of trade on Wednesday. Brent crude futures fell 1 cent , trading at $92.44 per barrel.

Related Articles

Leave a Reply

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

Back to top button