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Asian Stocks Lower, Dollar Edges Up Ahead of Fed: Markets Wrap

Asian stocks weakened Wednesday as investors assessed the strength of the economic recovery against the risk of a shift in the Federal Reserve’s dovish policy projections. Benchmark Treasury yields hovered near their highest levels in over a year.

Modest declines across regional stock indexes weighed on MSCI Inc.’s Asia-Pacific gauge. China swung between gains and losses, while South Korea’s index underperformed. Equity futures in Europe and the U.S. ticked lower after a weaker close for the S&P 500 Index snapped three sessions of record-breaking gains. Apple Inc. and Microsoft Corp. lifted the tech-heavy Nasdaq 100.

The Treasury 10-year yield held around 1.61% heading into day two of the Fed’s meeting, after a 20-year bond auction drew strong demand. Market-implied inflation expectations are at 12-year highs, and oil was steady below $65 a barrel. The dollar was stronger versus most major peers.

The Fed’s updates to the outlook for rates and the economy, due Wednesday, are center stage as the global recovery gains traction. Rates markets are positioned for a hike sooner than the central bank’s current guidance suggests, with rising inflation expectations boosting bond yields and sparking a rotation from growth to value stocks. Seasoned bond investor Bill Gross predicted in a Bloomberg TV interview that inflation will rise to 3% to 4% in the coming months.

“The concern is the assets that have worked best over the last decade -- rates, credit of all kinds and also long duration equities -- may not be the only games in town anymore,” said David Wong, investment strategist at AllianceBernstein.

Elsewhere, Bitcoin traded below $56,000, having topped $61,000 over the weekend.

Tug of War of Favorable Conditions Benefits Value Stocks: AGI

Fed Chair Jerome Powell will likely reaffirm his steady policy stance at the Fed policy meeting Wednesday.

Bank of England rate decision Thursday. BOE is expected to leave monetary policy unchanged.

Bank of Japan monetary policy decision and Governor Haruhiko Kuroda briefing Friday.


S&P 500 futures slipped 0.1% as of 1:15 p.m. in Tokyo. The S&P 500 Index declined 0.2%.

Topix index was down 0.2%.

Australia’s S&P/ASX 200 Index fell 0.7%.

South Korea’s Kospi Index dropped 1.1%.

Hang Seng Index fell 0.1%.

Shanghai Composite Index slipped 0.3%.

CSI 300 Index gained 0.1%.


The yen fell 0.1% to 109.13 per dollar.

The offshore yuan traded at 6.5018 per dollar.

The Bloomberg Dollar Spot Index rose 0.1%.

The euro was steady at $1.1900.


The yield on 10-year Treasuries was at 1.62%.

Australia’s 10-year bond yield rose three basis points to 1.73%.


West Texas Intermediate crude was at $64.72 a barrel.

Gold was up 0.3% at $1,736.49 an ounce. 



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