Asia stocks steady after day of steep losses

Sydney — Asian share markets stabilised on Tuesday after steep losses in the past 24 hours, while the US dollar remained elevated as investors considered the prospects interest rates would remain higher for longer in many developed economies.

MSCI’s broadest index of Asia-Pacific shares outside Japan bounced slightly 0.4%, after US stocks ended the previous session with mild losses. The index is up 0.8% so far this month.

Australia’s S&P/ASX200 was up 0.13% and Japan’s Nikkei stock index rose 0.26%.

Hong Kong’s Hang Seng index opened up 0.68% and China’s blue chip CSI300 was 0.3% higher in early trade.

The Reserve Bank of Australia is expected to extend its monetary tightening campaign when it meets on Tuesday. The central bank is likely to lift the official cash rate by another 25 basis points to 3.35%, according to economists polled by Reuters.

“Sentiment in markets is dominated by central banks and the repricing of rates yet again,” Kerry Craig, JPMorgan Asset Management’s global market strategist, said.

“Equities have had a strong run since the start of the year so seeing an air pocket emerge now is no major surprise. It’s a quiet week for economic data globally and when that is the case uncertainty over interest rates is the dominant theme among investors,” Craig said.

In the Asian trading session, the yield on benchmark 10-year treasury notes hit 3.6268% compared with its US close of 3.632% on Monday. The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 4.4368% compared with a US close of 4.456%.

The repricing of higher rates began after strong US jobs growth in January, with employment rising 517,000, more than double economists’ expectations. The unemployment rate hit 3.4%, the lowest in more than 53 years.

Investors will be closely watching a speech by Federal Reserve chair Jerome Powell at the Economic Club of Washington later on Tuesday.

Overnight on Wall Street, the Dow Jones industrial average fell 0.1%, the S&P 500 lost 0.61% and the Nasdaq Composite dropped 1%.

“The market has repriced to expect that the Fed Funds rate will peak just above 5% and it now only anticipates very limited rate cuts, just one of 25 basis points by the end of this year,” ANZ economists wrote.

“It’s very clear that sentiment is fragile and data dependent, and this new defensive posture may have further to run near term as risk positions are scaled back.”

The dollar eased 0.04% against the yen to 132.6, after touching a three-week high of 132.9 during the US trading session.

The European single currency was up 0.1% on the day at $1.0736, having lost 1.16% in a month.

The dollar index, which tracks the greenback against a basket of trading partner currencies, was down marginally at 103.47 from its US trading levels. However, it remains well above its recent low of 101.55 on February 3.

US crude ticked up 0.9% to $74.78 a barrel. Brent crude rose to $81.69 a barrel. Gold was slightly higher. Spot gold was traded at $1871.65 an ounce.

Reuters