Asian equities fell in tumultuous trading on Wednesday, failing to continue Wall Street's advance as ongoing concerns about interest rates and inflation remained a top priority for investors, and as the Japanese yen reached a new 24-year low versus the dollar.
Asian equities fell in tumultuous trading on Wednesday, failing to continue Wall Street's advance as ongoing concerns about interest rates and inflation remained a top priority for investors, and as the Japanese yen reached a new 24-year low versus the dollar.
MSCI's broadest index of Asia-Pacific equities outside Japan lost 1%, but was up 1.39 % from its more than five-week low on Monday. The Tokyo Nikkei gave up early gains and remained unchanged.
Investors continue to evaluate how concerned they should be that central banks would force the global economy into a recession as they strive to curb soaring inflation with interest rate hikes.
Overnight, the major U.S. stock indexes gained 2% on the potential that the economic picture may not be as bleak as feared during trading last week, when the S&P 500 recorded its worst weekly percentage fall since March 2020.
"I believe that the current post-holiday bear market recovery is a reflection of investors' anxiety as to whether inflation and Fed hawkishness have reached their apex — I think we're near," said Invesco's global market strategist for Asia Pacific, David Chao.
Even while I believe global stock markets will conclude the year higher than where they are currently, it is possible to anticipate continuing market volatility until it becomes evident that the Fed will not push the U.S. economy into recession in order to combat persistent inflation.
S&P 500 and Nasdaq futures dipped nearly 0.5 percent, indicating that Wall Street may not be able to duplicate Tuesday's rise.
Chinese blue chips were down 0.4%, Hong Kong's Hang Seng Index was down 0.9%, and Korea's KOSPI was down 1.78%.
The chairman of the U.S. Federal Reserve, Jerome Powell, is scheduled to begin his testimony before Congress today. Investors are waiting for more hints on the likelihood of another 75 basis point rate rise at the Fed's July meeting.
Most other global central banks are in a similar position, with the exception of the Bank of Japan, which committed last week to retain its ultra-low interest rate policy.
The disparity between low interest rates in Japan and increasing interest rates in the United States has weighed on the yen, which touched a record 24-year low of 136.71 per dollar in early trade before recovering to 136.18.
Wednesday's publication of the minutes from the Bank of Japan's April policy meeting revealed the central bank's worry about the effect of the falling yen on the country's economic climate.
On Wednesday, other currency movements were more subdued, with the dollar index, which monitors the greenback versus six rivals, edging up to 104.6.
At 3.2674, the yield on benchmark 10-year U.S. Treasuries remained relatively stable.
A person briefed on the proposal told Reuters that U.S. President Joe Biden is anticipated to ask for a temporary suspension of the 18.4-cent-per-gallon federal tax on gasoline on Wednesday.
Brent declined 2.1% to $112.27 per barrel, while U.S. crude slid 2.21 percent to $108.09 per barrel.
The spot price of gold decreased 0.21 percent to $1828.70 per ounce.
Bitcoin continues to trade at $20,640 a week after reaching a low of $17,592.
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