© Reuters. FILE PHOTO: Monitors showing stock index prices and the exchange rate of the Japanese yen against the US dollar are seen at the Tokyo Stock Exchange in Tokyo, Japan, January 4, 2022. REUTERS/Issei Kato /file photo
by Scott Murdoch
SYDNEY (Reuters) – Asian stocks fell on Tuesday as weak trade data weighed on Chinese stocks as investors awaited testimony from Federal Reserve Chairman Jerome Powell later in the day for clues on the next central bank move on rates.
Data on Tuesday showed China’s exports and imports fell sharply between January and February, reflecting a slowdown in the global economy and weak domestic demand. That pushed Hong Kong down 0.76% and China’s top-tier CSI300 Index down 1.2%, erasing earlier gains.
MSCI’s broader index of Asia-Pacific stocks outside of Japan fell 0.3%, though the index is up 2.9% so far this month.
Beyond China, investors’ focus remains on the US interest rate outlook and what Powell has to say.
“US rates remain the main driver for the Asia region in terms of absolute performance,” Dan Fineman, co-head of APAC equity strategy at Credit Suisse, told Reuters.
“China with its two sessions is important, but the rates are going to matter more than what is happening here in Asia,” he said, referring to China’s National People’s Congress taking place in Beijing.
Returns for the benchmark index reached 3.9578%, compared with the US close of 3.983% on Monday.
The two-year yield, rising with traders’ expectations for higher federal funds rates, touched 4.88% compared with a US close of 4.894%.
With a focus on monetary policy, Australian stocks closed 0.49% higher, reversing earlier losses after the central bank raised interest rates, as expected, but tempered its aggressive outlook, which investors they took it as a sign that the end of the policy tightening cycle might be near. . That sent the Australian dollar to a more than two-month low of $0.6690.
stock index rose 0.3%.
In early European trading, the pan-region was up 0.12%, Germany was up 0.11% and futures were up 0.23%.
US stock futures, the , rose 0.19% to 4,060.
Fed Chairman Powell is due to deliver his semiannual testimony to Congress on Tuesday and Wednesday, which will be closely watched for clues about the extent and duration of the US central bank’s tightening monetary policy. designed to curb inflation.
Futures traders are quoting a 76% chance the Fed will raise rates by 25 basis points at its March 21-22 meeting and a 24% chance of a 50bp hike.
The US February jobs report is due on Friday and any weakening in the strong labor market will be seen as a sign that the Fed’s rate hikes are having the desired effect.
“Over the next few days, testimony from Congress will be critical for markets. Investors have reassessed what they think the Fed will do with interest rates in March and in the second quarter,” said Tai Hui, head of asset management. from JPMorgan (NYSE:) Asian Market Strategist.
Bank of America (NYSE:) Chief Executive Officer Brian Moynihan told a business summit in Sydney on Tuesday that the bank predicted the US economy would reach a technical recession later this year before the central bank begins cutting rates in 2024.
“It’s a very mild recession in the scheme of things. I don’t think we’ll see a deep recession,” he said.
“In our view, that’s based on a slowdown on the corporate or business side, not a slowdown on the consumer side.”
In Asian trade, the dollar rose 0.05% against the yen to 135.99, weaker than its yearly high of 137.10 hit last week.
The euro was up 0.1% on the day at $1.0684, after gaining 1.02% in a month, while the euro, which tracks the dollar against a basket of major currencies, was down as low as 104, 2. 3.
Benchmark US West Texas Intermediate crude rose 0.27% to $80.68 a barrel. was higher than $86.43 per barrel.
Gold was slightly higher. it traded at $1848.56 per ounce. (GOAL/)
