By Kane Wu
HONG KONG (Reuters) – Asian stocks weakened on Tuesday, following a pullback on Wall Street as traders stepped up their bets on U.S. rate hikes in 2022 after President Joe Biden picked Federal Reserve Chairman Jerome Powell, to head the central bank for a second term.
The London market indicated a softer open with futures at 0.21%, while E-mini futures for the remained stable.
The MSCI gauge of Asia-Pacific stocks outside of Japan fell 0.52%, while Hong Kong’s slid 1%.
China’s benchmark CSI300 cut morning losses to stay just above the red, led by real estate stocks after Chinese banks were urged to issue more loans for real estate projects.
Australia outperformed, closing 0.79% higher, driven by mining companies and energy stocks. Japanese markets were closed for a public holiday.
On Monday, President Biden asked Powell to continue as Fed chairman and Lael Brainard, the other top candidate for the job, for vice-president. The news initially supported Wall Street stocks https://www.reuters.com/markets/europe/futures-rise-covid-sensitive-sectors-recover-2021-11-22, before the market retreated into the afternoon with the S&P 500 and closing against all-time highs. The dollar attracted strong support.
Riskier assets have been rocked again in recent sessions amid rising COVID-19 cases in Europe and renewed restrictions, watering investor hopes for a faster recovery in consumption and consumption. growth in the world.
Outgoing German Chancellor Angela Merkel said the latest wave is the worst the country has seen so far, as Austria entered a new lockdown https://www.reuters.com/markets/stocks / austria-enters-fourth-lockdown-covid- cases-soar-anew-europe-2021-11-22 Monday.
Powell’s current tenure, which has focused on job creation https://www.reuters.com/markets/us/powell-tapped-second-term-fed-chair-2021-11-22 at From the focus on inflation, has been positive for risky assets, with the S&P gaining 69.7% since his appointment.
“The US dollar looks set to hold on to its gains after Powell’s re-appointment as it leaves room for markets to flirt with the idea of a faster cut,” TD Securities analysts said in a note. .
US rate chatter kept good support near a 16-month high. The greenback was also near a 4.5-year high against the yen during the first trades on Tuesday.
US Treasury yields have been dragged higher by two-year bonds, which generally move with interest rate expectations. It reached its highest level since early March 2020.
“The market expects the odds of a rate hike to increase next year … it’s widely predicted (that we will have) a rate hike three to four times higher next year,” said Edison Pun, analyst. main market at Saxo Markets.
Commodities rose 0.19% to $ 1,808.4 an ounce, tying Monday’s losses. Gold prices were under pressure as Powell’s appointment raised expectations that the central bank would stay the course on declining economic support.
Oil prices were in the red again after a short rebound the day before recent losses on reports that OPEC + may adjust its plans to increase oil production if major consuming countries release crude from their reserves or if the coronavirus pandemic is slowing demand.
was down 0.49% to $ 79.31 per barrel and fell 0.7% to $ 76.21 per barrel at 0521GMT.
The US Department of Energy is expected to announce a loan of oil from the Strategic Petroleum Reserve on Tuesday, in coordination with other countries, Reuters reported earlier.