Asian equities fell on Tuesday after Federal Reserve Chair Jerome Powell toughened his stance on fighting inflation signaling traders to brace for more aggressive monetary-policy tightening.
Share in Mainland China is trading higher while Hang Kong, Japan and South Korea dipped. The MSCI Asian Index ex Japan dropped by 0.68%
Shorter maturities paced a renewed retreat in Treasuries on the prospect of three consecutive half-point Fed interest-rate hikes, which would be the sharpest tightening since 1982.
Powell signaled increases of such increments are possible and found merit in the idea of “front-end loading” moves. A portion of the Treasury yield curve inverted again.
Central bankers are stepping up efforts to quell some of the highest inflation in a generation.
“Equities are really torn between these two forces right now and the first one is that earnings are actually pretty good,” Anastasia Amoroso, chief investment strategist at iCapital Securities LLC, said on Bloomberg Television as reported by Bloomberg.
But “anytime equities rally it seems like the Fed officials are coming in with more and more hawkish talk,” she said.
Crude oil pared gains with the WTI trading around $103 a barrel while the Brent is trading around $107 a barrel.