logo |

News

    Home   >     Industry    >     Main body

    Asia shares brace for hawkish Fed, wary of potential Ukraine conflict

    Abstract:Asian share markets slipped on Monday with the Federal Reserve expected to confirm it will soon start draining the massive liquidity that has fuelled the huge gains in growth stocks in recent years.

      Asian shares slipped on Monday as investors braced for a Federal Reserve meeting at which it is expected to confirm it will soon start draining the massive lake of liquidity that has supercharged growth stocks in recent years.

      

      Adding to the caution were concerns about a possible Russian attack on Ukraine with the U.S. State Department pulling out family members of its embassy staff in Kyiv.

      The New York Times reported President Joe Biden was considering sending thousands of U.S. troops to NATO allies in Europe along with warships and aircraft.

      MSCI‘s broadest index of Asia-Pacific shares outside Japan eased 0.7% and Japan’s Nikkei 0.1%. Chinese blue chips added 0.4%, perhaps aided by the recent easing in policy by Beijing.

      In Europe, EUROSTOXX 50 futures slipped 0.4%, while FTSE futures fell 0.2%.

      But Wall Street futures bounced after last weeks drubbing, with the S&P 500 futures up 0.7% and Nasdaq futures 0.8%.

      Anxious markets are now even pricing in a small chance the Fed hikes rates this week, though the overwhelming expectation is for a first move to 0.25% in March and three more to 1.0% by year end.

      “With inflation eye-wateringly high, the Fed is on course to steadily remove the ultra-accommodative monetary policy that has been a key prop to stock prices for over a decade now,” said Oliver Allen, a market economist at Capital Economics.

      The prospect of higher borrowing costs and more attractive bond yields has taken a toll on tech stocks with their lofty valuations, leaving the Nasdaq down 12% so far this year and the S&P 500 nearly 8%.

      The rout was exacerbated by a slide in Netflix, which tumbled almost 22% on a gloomy forecast for subscriber growth, shedding $44 billion in market value.

      Such was the scale of the losses that Treasuries actually rallied late last week on speculation the bonfire of market wealth might scare the Fed into being less hawkish, a variation of the old Greenspan put.

      However, Allen noted that even with the recent drop the S&P 500 was still 40% above where it ended 2019, and the Nasdaq 60%.

      “Investors may not be able to rely on a so-called ‘Fed put’ this time around, given that the central banks tightening cycle has not even begun, and that the strength of the U.S. economy suggests that much tighter policy is warranted.”

      Indeed, the first reading of U.S. gross domestic product for the December quarter is due this week and forecast to show growth running at an annualised 5.4% before Omicron put its foot on the brakes.

      Earnings season is also well under way and companies reporting this week include IBM, Microsoft, Johnson & Johnson, Tesla and Apple.

      Around a fifth of the S&P 500 is expected to provide quarterly updates this week.

      While Treasuries did bounce late last week, 10-year yields are still up 22 basis points on the month so far at 1.77% and not far from levels last seen in early 2020.

      That rise has generally supported the U.S. dollar, which added 0.5% on a basket of currencies last week and last stood at 85.647. The euro was stuck at $1.1324, having failed to sustain a recent rally to near $1.1500.

      “The risk is the Fed‘s statement portrays an urgency to act soon, likely in March, in the face of very high inflation,” said Joseph Capurso, CBA’s head of international economics.

      “That could even encourage markets to price a risk of a 50 basis point rate hike in March and, under that scenario, we expect a knee-jerk reaction above its 4 January high of 96.46.”

      The Japanese yen tends to benefit from safe haven flows as stocks crumble, keeping the dollar at 113.84 and uncomfortably close to last weeks low of 113.47.

      Gold held up at $1,836 an ounce, having hit a six-week peak of $1,842 last week. [GOL/]

      Oil prices were rising again having climbed for five weeks in a row to a seven-year peak on expectations demand will stay strong and supplies limited. [O/R]

      Brent added 83 cents to $88.72 a barrel, while U.S. crude rose 77 cents to $85.91.

      (Reporting by Wayne Cole; Editing by Sam Holmes and Edwina Gibbs)

    tagreuters.com2022newsml_LYNXMPEI0N00K1.jpg

      

    United States Dollar

    • United Arab Emirates Dirham
    • Australia Dollar
    • Canadian Dollar
    • Swiss Franc
    • Chinese Yuan
    • Danish Krone
    • Euro
    • British Pound
    • Hong Kong Dollar
    • Hungarian Forint
    • Japanese Yen
    • South Korean Won
    • Mexican Peso
    • Malaysian Ringgit
    • Norwegian Krone
    • New Zealand Dollar
    • Polish Zloty
    • Russian Ruble
    • Saudi Arabian Riyal
    • Swedish Krona
    • Singapore Dollar
    • Thai Baht
    • Turkish Lira
    • United States Dollar
    • South African Rand

    United States Dollar

    • United Arab Emirates Dirham
    • Australia Dollar
    • Canadian Dollar
    • Swiss Franc
    • Chinese Yuan
    • Danish Krone
    • Euro
    • British Pound
    • Hong Kong Dollar
    • Hungarian Forint
    • Japanese Yen
    • South Korean Won
    • Mexican Peso
    • Malaysian Ringgit
    • Norwegian Krone
    • New Zealand Dollar
    • Polish Zloty
    • Russian Ruble
    • Saudi Arabian Riyal
    • Swedish Krona
    • Singapore Dollar
    • Thai Baht
    • Turkish Lira
    • United States Dollar
    • South African Rand
    Current Rate  :
    --
    Amount
    United States Dollar
    Available
    -- United States Dollar
    Risk Warning

    The Database of WikiFX comes from the official regulatory authorities , such as the FCA, ASIC, etc. The published content is also based on fairness, objectivity and fact. WikiFX doesn't ask for PR fees, advertising fees, ranking fees, data cleaning fees and other illogical fees. WikiFX will do its utmost to maintain the consistency and synchronization of database with authoritative data sources such as regulatory authorities, but does not guarantee the data to be up to date consistently.

    Given the complexity of forex industry, some brokers are issued legal licenses by cheating regulation institutes. If the data published by WikiFX are not in accordance with the fact, please click 'Complaints 'and 'Correction' to inform us. We will check immediately and release the results.

    Foreign exchange, precious metals and over-the-counter (OTC) contracts are leveraged products, which have high risks and may lead to losses of your investment principal. Please invest rationally.

    Special Note, the content of the Wikifx site is for information purposes only and should not be construed as investment advice. The Forex broker is chosen by the client. The client understands and takes into account all risks arising with Forex trading is not relevant with WikiFX, the client should bear full responsibility for their consequences.