Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Hong Kong — Asian shares fell on Tuesday after hawkish comments from two US Federal Reserve officials overnight with investors cautious ahead of inflation data, while China’s reopening after Covid-19 restrictions pushed commodities higher.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.02% in early trade.
“The main theme overnight was cautiousness 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 hike (interest) rates to above 5% and hold them there for some time,” Commerzbank said in a client note.
The S&P 500 index began the week on a bullish tone with a more than 1.4% increase in early US trading on Monday before giving up all the gains to close a touch lower.
The US dollar and US treasury yields remained under pressure, with the yield on US 10-year notes edging higher on Tuesday by 1.14 basis points to 3.5284%, from 3.517% late on Monday. The dollar index fell 0.068%.
“Sentiment may turn more cautious ahead of the US consumer price index release (CPI) on Thursday, dampening the ‘risk on’ trades initiated as a result of the optimism around China’s reopening,” Mizuho Bank said in a note.
If US consumer price data confirms cooling seen in the most recent monthly jobs report, Atlanta Fed Bank president Bostic said he would have to take a quarter point increase “more seriously and to move in that direction”.
China’s reopening buoyed sentiment with its stocks rising for a sixth consecutive session on Monday, while Hong Kong shares jumped to 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 this optimism coming up is really the reality of this opening up. Even in Hong Kong, although it is officially open, the visa issuance has been rather slow,” Nguyen said.
China’s benchmark dipped 0.21% on Tuesday while Hong Kong’s Hang Seng index fell 0.85%.
Copper prices hit their highest in more than six months, driven higher by an improving demand outlook after top consumer China’s reopening, while zinc climbed 5% to its highest since December 15.
Japan’s Nikkei rose 0.57%, bucking the regional trend.
Core consumer prices in Tokyo, released on Tuesday, rose a faster-than-expected 4.0% in December from a year earlier, underpinning market expectations that the Bank of Japan may phase out its huge stimulus by tweaking its yield curve control policy.
In Australia, shares lost 0.19% in early trading.
Oil prices were little changed on Tuesday as traders awaited clarity on rate hikes. US crude fell 0.07% to $74.58 a barrel and Brent was at $79.51, down 0.18%.
Gold prices inched higher, adding 0.1% to $1,872.66 an ounce.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Shares in Asia dip after Fed’s hawkish remarks
Hong Kong — Asian shares fell on Tuesday after hawkish comments from two US Federal Reserve officials overnight with investors cautious ahead of inflation data, while China’s reopening after Covid-19 restrictions pushed commodities higher.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.02% in early trade.
“The main theme overnight was cautiousness 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 hike (interest) rates to above 5% and hold them there for some time,” Commerzbank said in a client note.
The S&P 500 index began the week on a bullish tone with a more than 1.4% increase in early US trading on Monday before giving up all the gains to close a touch lower.
The US dollar and US treasury yields remained under pressure, with the yield on US 10-year notes edging higher on Tuesday by 1.14 basis points to 3.5284%, from 3.517% late on Monday. The dollar index fell 0.068%.
“Sentiment may turn more cautious ahead of the US consumer price index release (CPI) on Thursday, dampening the ‘risk on’ trades initiated as a result of the optimism around China’s reopening,” Mizuho Bank said in a note.
If US consumer price data confirms cooling seen in the most recent monthly jobs report, Atlanta Fed Bank president Bostic said he would have to take a quarter point increase “more seriously and to move in that direction”.
China’s reopening buoyed sentiment with its stocks rising for a sixth consecutive session on Monday, while Hong Kong shares jumped to 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 this optimism coming up is really the reality of this opening up. Even in Hong Kong, although it is officially open, the visa issuance has been rather slow,” Nguyen said.
China’s benchmark dipped 0.21% on Tuesday while Hong Kong’s Hang Seng index fell 0.85%.
Copper prices hit their highest in more than six months, driven higher by an improving demand outlook after top consumer China’s reopening, while zinc climbed 5% to its highest since December 15.
Japan’s Nikkei rose 0.57%, bucking the regional trend.
Core consumer prices in Tokyo, released on Tuesday, rose a faster-than-expected 4.0% in December from a year earlier, underpinning market expectations that the Bank of Japan may phase out its huge stimulus by tweaking its yield curve control policy.
In Australia, shares lost 0.19% in early trading.
Oil prices were little changed on Tuesday as traders awaited clarity on rate hikes. US crude fell 0.07% to $74.58 a barrel and Brent was at $79.51, down 0.18%.
Gold prices inched higher, adding 0.1% to $1,872.66 an ounce.
Reuters
JSE faces mixed Asian markets ahead of Fed speech
Gold prices steady as investor focus turns to Powell speech
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
JSE races to new record as China drops zero-Covid approach
Global stocks rally as investors scale back expectations for rate hikes
US rate hopes and China’s reopening boost Asian shares
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.