Asia Stocks Fall as Dollar Stays at One-Year High: Markets Wrap

Most Asian stocks fell Wednesday as the dollar held around a one-year high, bolstered by robust U.S. economic data that highlighted the case for tighter monetary policy and pushed up Treasury yields.

MSCI Inc.’s Asia-Pacific stock index snapped a four-day climb, with Japan lower amid slower export gains. U.S. and European futures wavered. The S&P 500 extended a rally overnight on expanding retail sales and solid reports from the likes of Home Depot Inc. that supported confidence in the U.S. outlook.

But a call for more hawkish monetary policy from Federal Reserve Bank of St. Louis President James Bullard underlined worries that high inflation could yet derail growth. Markets are waiting to see who President Joe Biden picks as Fed chair nominee from Governor Lael Brainard and incumbent Jerome Powell.

The dollar extended an advance and the yen traded around its weakest in more than four years. The euro was at the lowest since July 2020. Emerging Asian currencies slid and the Turkish lira extended a drop before a central bank meetng.

Treasuries held losses, with the 10-year yield above 1.6%. Traders are waiting to see the strength of demand at a 20-year auction Wednesday.

Corporate profits have generally weathered the price pressures building up in the recovery from the pandemic, helping global stocks to stay around all-time highs. The question remains whether the jump in costs will prove transitory or become a bigger challenge that forces a sharper monetary policy response, roiling both shares and bonds.

Corporate profits have generally weathered the price pressures building up in the recovery from the pandemic, helping global stocks to stay around all-time highs. The question remains whether the jump in costs will prove transitory or become a bigger challenge that forces a sharper monetary policy response, roiling both shares and bonds.

In Australia, the currency retreated after wages data Wednesday backed Reserve Bank Governor Philip Lowe’s dovish stance. 

Elsewhere, oil retreated as investors weighed the odds that the Biden administration will tap emergency reserves in a coordinated move with nations such as China.

Cryptocurrencies remained lower after a tumble, with Bitcoin slipping below the $60,000 level.

What to watch this week:

• Euro region CPI. Wednesday
• U.S. housing starts. Wednesday
• Conference Board U.S. leading index, initial jobless claims. Thursday
• Fed’s Richard Clarida and Mary Daly speak at Asia Economic Policy Conference. Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 6:10 a.m. in London. The S&P 500 rose 0.4%
• Nasdaq 100 futures were little changed. The Nasdaq 100 rose 0.8%
• Japan’s Topix index fell 0.6%
• Australia’s S&P/ASX 200 Index fell 0.7%
• South Korea’s Kospi index lost 1.2%
• Hong Kong’s Hang Seng Index slid 0.5%
• China’s Shanghai Composite Index added 0.3%
• Euro Stoxx 50 futures fell 0.1%

Currencies

• The Japanese yen was at 114.83 per dollar
• The offshore yuan was at 6.3868 per dollar
• The Bloomberg Dollar Spot Index rose 0.1%
• The euro was at $1.1297, down 0.2%

Bonds

• The yield on 10-year Treasuries was at 1.63%
• Australia’s 10-year bond yield was at 1.86%, up almost three basis points

Commodities

• West Texas Intermediate crude fell 1% to $79.94 a barrel
• Gold was at $1,853.88 an ounce, up 0.2%

Source: Bloomberg