GLOBAL MARKETS-Asian Stocks Pull Back as Investors Await FOMC Result

* Investors looking for signs of faster policy normalization.

* The Fed is likely to make more optimistic forecasts, but no policy change is expected

* BOE and BOJ policy decisions are also due this week.

TOKYO / NEW YORK, March 17 (Reuters) – Asian stocks fell on Wednesday, following Wall Street, as investors waited to see if the US Federal Reserve pointed a faster path to policy normalization than expected previously.

The Federal Open Market Committee (FOMC) of the US central bank will end a meeting two days later in the day.

A regional equity index that excludes 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 broke the trend to add 0.1%, but the broader Topix Index held flat to slightly lower.

Global markets have been hit in recent weeks by a fall in Treasuries that sent the benchmark yield soaring to a high in more than a year as bond investors bet that the acceleration of stocks COVID-19 vaccines and massive fiscal stimulus would spur faster-than-expected growth and inflation in the world’s largest economy.

The volatility fueled speculation that the Fed could be forced to make a technical adjustment to the levers that control its monetary policy rate, but few expect the central bank to act on it at this week’s meeting, even if it publishes forecasts of more optimistic growth.

“We hope (Chairman Jerome) Powell will note that the FOMC has the tools to intervene if the bond market becomes disorderly or limits the economic recovery,” wrote analysts at the Commonwealth Bank of Australia.

“But we expect Powell to reject the policy tightening talks because of the large amount of slack in the job market.”

“US bond and USD yields could rise if the post-FOMC statement and Powell statement are not deemed moderate enough.”

Benchmark 10-year Treasury yields 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 of last year.

An index that tracks the dollar against six major pairs held at around 91.90 after its pullback from a three-month high of 92.506, touched last week.

The forex market caution may 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 may phase out a numerical target for buying 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 rose to their highest level in more than two weeks on the prospect of higher inflation.

Spot gold rose 0.2% to $ 1,734.81 an ounce.

Oil prices fell amid concerns about demand after Germany, France and other European countries suspended use of the AstraZeneca vaccine, a move that could slow the strength of the region’s economic recovery.

Brent crude futures fell 12 cents to $ 68.27 a barrel and US crude futures were down 3 cents to $ 64.77 a barrel.

Reporting by Kevin Buckland; Edited by Kim Coghill


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