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 closes a two-day meeting later in the day.
A regional stock index excluding Japan fell 0.5%, led by declines in South Korea’s Kospi.
The Shanghai Composite index lost 0.3% and Hong Kong’s Hang Seng fell 0.3%.
Japan’s Nikkei 225 fell slightly lower, while the broader Topix index countered the 0.1% upward trend.
European stocks were set to open weaker, with Euro Stoxx 50 futures in the pan-regional region falling 0.1%. FTSE futures also fell in early trading.
Global markets have been hit in recent weeks by a defeat in Treasury bonds, which has seen benchmark yield skyrocket for more than a year, as bond investors bet that the acceleration of COVID-19 vaccinations and massive fiscal stimulus would stimulate faster than expected growth and 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 against the policy tightening rumor because of the large amount of slack in the job market … US bond yields and the dollar may jump if the post-FOMC meeting statement and the statement of Powell are not considered peaceful enough. ”
Treasury yields for the 10-year reference period continued to consolidate at around 1.6%, standing at 1.6268% 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%, while the S&P 500 lost 0.16%. The Nasdaq Composite was up 0.09%.
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 was up 0.3% to $ 1,736.55 an ounce.
Brent oil futures rose 33 cents to $ 68.72 a barrel, and American oil futures increased 40 cents to $ 65.20 a barrel.
Kevin Buckland reporting; Editing by Kim Coghill and Sam Holmes