Asian markets show some resilience despite a sell-off on Wall Street overnight
20 January 2023 - 07:16
byKevin Buckland
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The trading gallery of the RHB Investment Bank Bhd. headquarters in Kuala Lumpur, Malaysia on November 21 2022. Picture: Samsul Said/Bloomberg
Tokyo — Most Asian equity markets edged higher on Friday, while the US dollar hung near its weakest level since May, with investors fretting about the risks of a global recession as the Federal Reserve presses on with interest rate increases.
US Treasury yields remained elevated in Tokyo after bouncing off four-month lows overnight. Japanese government bond yields stayed depressed, two days after the Bank of Japan defied investor pressure to loosen yield curve controls further.
Japan’s Nikkei added 0.16%, while Australia’s benchmark edged 0.09% higher, though South Korea’s Kospi slipped 0.24%.
Hong Kong’s Hang Seng advanced 0.75% and mainland blue chips were 0.32% firmer.
Asian markets showed some resilience despite a sell-off on Wall Street overnight, with the S&P 500 losing 0.76%. E-Mini futures indicated a small bounce at the reopen though, gaining 0.24%.
Worries about more Fed tightening were heightened by robust US employment data and fresh hawkish rhetoric from central bank officials.
Weekly jobless claims were lower than expected, pointing to a tight labour market.
Boston Fed president Susan Collins said the central bank would probably need to raise rates to “just above” 5%, then hold them there, while Fed vice-chair Lael Brainard said that despite the recent moderation in inflation, it remains high and “policy will need to be sufficiently restrictive for some time”.
Those comments by “usually reliable Fed dove” Brainard in particular are “compounding rate hike fears,” said Tony Sycamore, an analyst at IG.
“For her to come out and say we still need higher rates, it really sparks the idea that the Fed really wants to deliver the 75 basis points of rate hikes that it projected back in December.”
“The labour market is just a little too hot to back off,” Sycamore added.
The market bets the policy rate will be just below 5% in June, implying just more than 50 basis points of additional tightening.
Meanwhile, the dollar index, which measures the greenback against six peers, including the euro and yen, was little changed at 102.10, holding close to a 7½-month low of 101.51, reached on Wednesday.
The benchmark 10-year Treasury yield was around 3.4% after bouncing off the lowest since mid-September at 3.321% overnight.
Equivalent JGB yields were flat at 0.405%, holding around that level since getting knocked back from above the Bank of Japan’s 0.5% policy ceiling on Wednesday, when the central bank refrained from further tweaks to its yield curve controls.
Elsewhere, crude oil prices continued to rise. Brent futures for March delivery gained 48c, or 0.6%, to $86.64 a barrel, while US crude advanced 54c to $80.87 per barrel, a 0.7% gain.
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.
Asian markets rise as dollar loses ground
Asian markets show some resilience despite a sell-off on Wall Street overnight
Tokyo — Most Asian equity markets edged higher on Friday, while the US dollar hung near its weakest level since May, with investors fretting about the risks of a global recession as the Federal Reserve presses on with interest rate increases.
US Treasury yields remained elevated in Tokyo after bouncing off four-month lows overnight. Japanese government bond yields stayed depressed, two days after the Bank of Japan defied investor pressure to loosen yield curve controls further.
Japan’s Nikkei added 0.16%, while Australia’s benchmark edged 0.09% higher, though South Korea’s Kospi slipped 0.24%.
Hong Kong’s Hang Seng advanced 0.75% and mainland blue chips were 0.32% firmer.
Asian markets showed some resilience despite a sell-off on Wall Street overnight, with the S&P 500 losing 0.76%. E-Mini futures indicated a small bounce at the reopen though, gaining 0.24%.
Worries about more Fed tightening were heightened by robust US employment data and fresh hawkish rhetoric from central bank officials.
Weekly jobless claims were lower than expected, pointing to a tight labour market.
Boston Fed president Susan Collins said the central bank would probably need to raise rates to “just above” 5%, then hold them there, while Fed vice-chair Lael Brainard said that despite the recent moderation in inflation, it remains high and “policy will need to be sufficiently restrictive for some time”.
Those comments by “usually reliable Fed dove” Brainard in particular are “compounding rate hike fears,” said Tony Sycamore, an analyst at IG.
“For her to come out and say we still need higher rates, it really sparks the idea that the Fed really wants to deliver the 75 basis points of rate hikes that it projected back in December.”
“The labour market is just a little too hot to back off,” Sycamore added.
The market bets the policy rate will be just below 5% in June, implying just more than 50 basis points of additional tightening.
Meanwhile, the dollar index, which measures the greenback against six peers, including the euro and yen, was little changed at 102.10, holding close to a 7½-month low of 101.51, reached on Wednesday.
The benchmark 10-year Treasury yield was around 3.4% after bouncing off the lowest since mid-September at 3.321% overnight.
Equivalent JGB yields were flat at 0.405%, holding around that level since getting knocked back from above the Bank of Japan’s 0.5% policy ceiling on Wednesday, when the central bank refrained from further tweaks to its yield curve controls.
Elsewhere, crude oil prices continued to rise. Brent futures for March delivery gained 48c, or 0.6%, to $86.64 a barrel, while US crude advanced 54c to $80.87 per barrel, a 0.7% gain.
Reuters
Asian stocks gain ground as yen hits seven-month high
Global equities rise to one-month peaks on easing inflation
JSE faces mixed Asian markets as new US data worries traders
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