Asian stocks were mixed after Wall Street erased gains

Bloomberg – Asian stocks were mixed on Tuesday after the rally faded in the United States as Federal Reserve officials indicated the central bank would likely need to raise interest rates above 5% before making a decision.

Australian stocks fell and Hong Kong stock futures were slightly lower, while Japan’s Topix rose after reopening from a public holiday on Monday. Contracts on the S&P 500 fell after the index failed to hold above the key 3,900 level, erasing a advance of nearly 1.5% on Monday.

Traders hoping for a quick end to interest rate hikes as global inflation slows were weighed down by reality Monday when San Francisco Fed President Mary Daly said she expected the central bank to raise interest rates above 5%. His counterpart in Atlanta, Rafael Bostick, said policymakers should raise interest rates above 5% early in the second quarter and then wait “for a long time.”

That leaves those betting on slower gains awaiting Thursday’s US CPI report, which is due to come nearly a week after the latest jobs data showed slowing wage growth. The numbers will be among the last readings policymakers will see before they meet on January 31-February 1.

“In addition to the prospect of higher interest rates and a potential economic slowdown, any upward momentum from slowing inflation could be offset by still-high stock valuations and overly optimistic earnings expectations,” Morgan Stanley’s Chris Larkin told E*Trade. “It can be a recipe for volatile trading in the short and long term.”

The Dow Jones Industrial Average underperformed, while the Nasdaq 100 rose on the back of big technology gains. The dollar rose against most of the G10 currencies on Tuesday and rose 0.2% against the yen. The 10-year Treasury yield rose 1 basis point in early Asian trade.

Concerns about recession in the US and Europe this year were offset by renewed optimism about China. In early December, the world’s second-largest economy made a sharp turnaround from the tough restrictions imposed by Covid and quickly introduced other market-friendly changes. Its economy is now expected to grow 4.8% this year, according to data compiled by Bloomberg. The MSCI China Index is up about 50% since hitting an 11-year low in October.

Chinese authorities are considering setting a record quota for local government private bonds this year and expanding the budget deficit target With increased support for the economy, according to people familiar with the matter.

Developing country stocks entered a bull market, driven by optimism about China’s reopening and dollar weakness. The MSCI Emerging Markets Index rose 2.5% on Monday, bringing its gains from the low of Oct. 24 to more than 20%.

Some major moves in the markets as of 9:13 AM Tokyo time:

procedures

The S&P/ASX 200 fell 0.2%.

Hang Seng Index futures fell 0.2%.

Japan’s Topix rose 0.9

S&P 500 futures changed little; The S&P fell 0.1% on Monday

The Nasdaq 100 rose 0.6% on Monday

Digital currencies

Bitcoin rose 1.5% to $17,206.51.

Ether rose 4% to $1,319.87.

bonds

The yield on the 10-year Treasury note was hardly changed (3.54%).

The 10-year Australian yield fell 1 basis point, to 3.71%.

Raw materials

West Texas Intermediate crude rose 0.1%.

Spot gold fell 0.1 percent to $1,869.84 an ounce.

This article was produced with the help of Bloomberg Automation.