Asian stocks are falling after incredible Fed minutes


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SHANGHAI – Asian stocks fell on Thursday, prolonging the global decline after the minutes from the meeting of the Federal Reserve indicated faster growth of American interest rates than expected due to concerns about persistent inflation.

Concerns about higher U.S. rates combined with growing concerns about the rapid spread of the Omicron virus variant with coronavirus are affecting riskier assets.

Asian stocks took the example of overnight losses on Wall Street. The Nasdaq fell more than 3% on Wednesday in its biggest one-day drop in percentages since February, and the S&P 500 fell the most since Nov. 26, when news of the Omicron variant hit global markets for the first time.

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MSCI’s broadest Asia-Pacific stock index outside of Japan fell 0.95%, Australian stocks fell 1.53% and Japan’s Nikkei stock index fell 2.08%.

Chinese blue-chips fell 1.37 percent as private sector research showed that service sector activity in China expanded faster in December, but the continuation of the COVID-19 epidemic affected the outlook.

Elsewhere, the rotation of technology investors continued to hit high-profile names, with the Sony Group falling 6.8%.

“There is a risk that the Fed could fall into the trap of policy mistakes because they may have to raise interest rates faster than expected, but given the timing of their exit from quantitative easing, this could coincide with a slowdown in economic growth. cycles, as well as falling inflation-based effects, ”said Carlos Casanova, senior economist for Asia at Union Bancaire Privee in Hong Kong.

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Of course, if you set prices at a faster rate of Fed price cuts, it doesn’t reflect well on Asian asset classes, so you’ll probably see more outflows from the region, which will translate into weaker stocks and also depreciate pressures on the FX front . ”

Fed policymakers said at their December meeting that a “very tight” labor market and unbridled inflation could require it to raise interest rates earlier than expected and start cutting total assets as a second brake on the economy. minutes of that meeting.

Fed officials were equally concerned about the pace of price increases that promised to survive, with global supply bottlenecks “until the end” of 2022, the minutes show.

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The hawkish attitudes of the officials of the American central bank than expected also pushed the yields of the American treasury to the council. On Thursday, the U.S. 10-year yield remained elevated to 1.6929%, right after Wednesday’s close of 1.7030%.

U.S. two-year and five-year yields, which are more sensitive to expectations of rising interest rates, have been moving close to their highest levels since the first quarter of 2020.

Higher US yields continued to support the strong dollar, although the currency weakened against the yen after hitting a five-year high earlier this week, falling 0.13% to 115.95.

The euro remained stable at 1.1311 dollars, and the dollar index changed slightly to 96.161.

In commodity markets, global reference oil Brent fell 1.26% to $ 79.78 per barrel and US reference oil fell 1.07% to $ 77.02 per barrel after OPEC + producers agreed to increase production.

Trading gold was stable at $ 1,808.90 an ounce, and higher yields on U.S. bonds reduced the luster of the precious metal.

(Reporting by Andrew Galbraith; editing by Ana Nicolaci da Costa)

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