TOKYO / NEW YORK (Reuters) – Asian stocks fell on Wednesday, following Wall Street, as investors waited to see if the U.S. Federal Reserve would signal a faster path to normalizing the policy than expected.
The US Central Bank’s Federal Open Market Committee (FOMC) will end a two-day meeting later in the day.
A regional stock index excluding Japan sank 0.3%, led by declines in South Korea’s Kospi and Australia’s S & P / ASX 200.
The Shanghai Composite index fell 0.4% and Hong Kong’s Hang Seng fell 0.2%.
Japan’s Nikkei 225 countered the trend of adding 0.1%, but the broader Topix index was stable to slightly lower.
Global markets have been swayed in recent weeks by a loss in Treasury bonds, which saw benchmark yield rise to a peak of more than a year, as bond investors bet that accelerated COVID-19 vaccination and fiscal stimulus massive growth would spur faster-than-expected inflation in the world’s largest economy.
Volatility fueled speculation that the Fed may be forced to technical adjust the levers that control its basic interest rate, but few expect the central bank to act on the matter at this week’s meeting, even if it releases more optimistic growth forecasts. .
“We hope (President Jerome) Powell will note that the FOMC has the tools to intervene if the bond market becomes disorderly or restricts the economic recovery,” wrote analysts at the Commonwealth Bank of Australia.
“But we expect Powell to back down from talks about tightening policies because of the large amount of slack in the job market.”
“Yields on U.S. bonds and the US dollar may increase if the post-FOMC declaration and Powell’s declaration are not considered peaceful enough.”
Treasury yields for the 10-year reference period continued to consolidate at around 1.6%, standing at 1.6197% on Wednesday in Asia. They reached 1.6420% on Friday for the first time since February last year.
An index accompanying the dollar against six major pairs remained at around 91.90, following its retreat from a three-month high of 92.506, touched last week.
Foreign exchange market caution could extend throughout the week, with the Bank of England announcing its policy decision on Thursday, and the Bank of Japan concluding a policy review on Friday in which it can gradually eliminate a target numeric for the purchase of assets.
On Tuesday, the Dow Jones Industrial Average fell 0.39% to close at 32,825.95 points, while the S&P 500 lost 0.16% to 3,962.71. The Nasdaq Composite was up 0.09% to 13,471.57.
E-mini futures for the S&P 500 fell 0.04% on Wednesday.
Gold prices peaked in more than two weeks with the prospect of higher inflation.
Spot gold rose about 0.2% to $ 1,734.81 an ounce.
Oil prices fell amid concerns about demand after Germany, France and other European countries suspended the use of the AstraZeneca vaccine, a move that could reduce the strength of the region’s economic recovery.
Brent crude futures fell 12 cents to $ 68.27 a barrel and American crude futures fell 3 cents to $ 64.77 a barrel.
Kevin Buckland reporting; Editing by Kim Coghill