İnvestor, Asia, Fomc

İnvestor, Asia

Asian stocks retreat as investors await FOMC outcome

Asian stocks retreat as investors await FOMC outcome

17/3/2021 7:40:00 AM

Asia n stocks retreat as investors await FOMC outcome

Asia n stocks were set to open mostly lower on Wednesday following a sell-off in U.S. stocks, as investors awaited the Federal Reserve's meeting ...

BookmarkTOKYO/NEW YORK: Asian stocks fell on Wednesday, tracking Wall Street, as investors waited to see if the U.S. Federal Reserve will signal a faster path toward policy normalisation than previously expected.The U.S. central bank's Federal Open Market Committee (FOMC) will end a two-day meeting later in the day.

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AdvertisementAdvertisementAn index of regional equities excluding Japan sank 0.3per cent, led by declines in South Korea's Kospi and Australia's S&P/ASX 200.The Shanghai Composite index slid 0.4per cent, and Hong Kong's Hang Seng fell 0.2per cent.

Japan's Nikkei 225 bucked the trend to add 0.1per cent, but the broader Topix index was flat to slightly lower.Global markets have been swung in recent weeks by a rout in Treasuries that saw the benchmark yield soar to a more than one-year high as bond investors bet that accelerating COVID-19 vaccinations and massive fiscal stimulus would spur faster-than-expected growth and inflation in the world's biggest economy.

AdvertisementAdvertisementThe volatility stoked speculation the Fed may be forced into a technical adjustment to the levers controlling its policy rate, but few expect the central bank to act on the matter at this week's meeting, even if it releases rosier growth forecasts.

"We expect (Chair Jerome) Powell to note the FOMC has the tools to intervene if the bond market becomes disorderly or constrains the economic recovery," analysts of Commonwealth Bank of Australia wrote."But we expect Powell to push back against talk of policy tightening because of the large amount of labour market slack."

"U.S. bond yields and the USD could jump if the FOMC’s post‑meeting statement and Powell’s statement are not deemed dovish enough."AdvertisementBenchmark 10-year Treasury yields continued to consolidate around 1.6per cent, standing at 1.6197per cent on Wednesday in Asia. They reached 1.6420per cent on Friday for the first time since February of last year.

An index tracking the dollar against six major peers held at around 91.90 following its retreat from a three-month high of 92.506, touched last week.Currency market caution may extend all week, with the Bank of England announcing its policy decision on Thursday, and the Bank of Japan wrapping up a policy review on Friday in which it may phase out a numerical target for its asset buying.

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On Tuesday, the Dow Jones Industrial Average fell 0.39per cent to end at 32,825.95 points, while the S&P 500 lost 0.16per cent to 3,962.71. The Nasdaq Composite edged up 0.09per cent to 13,471.57.E-mini futures for the S&P 500 slipped 0.04per cent on Wednesday.

Gold prices edged up to hover at their highest in more than two weeks on prospects of higher inflation.Spot gold was up about 0.2per cent at US$1,734.81 per ounce.Oil prices were lower amid concerns over demand after Germany, France and other European countries suspended use of AstraZeneca's vaccine, a move which could curb the strength of the region's economic recovery.

Brent crude futures slid 12 cents to US$68.27 a barrel and U.S. crude futures slipped 3 cents to US$64.77 a barrel.(Reporting by Kevin Buckland; Editing by Kim Coghill) Read more: CNA »

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