Asian equities largely down on Tuesday ahead of U.S. inflation data which could incentives even more aggressive move by the U.S. Federal Reserve.
Shares in the Mainland China is marginally higher, while shares in Hong Kong, South Korea, Thailand and Japan are marginally down. The MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.3%.
U.S Treasury bond yield ticked up supporting the dollar with the dollar index reaching to test last week’s near-two year high giants its six major pairs.
U.S 10-year benchmark rose to 2.8017% while two-year yields touched 2.5242%.
“U.S stocks fell on Monday as investors grew increasingly concerned a three-year high in the benchmark US 10-year Treasury yield would start to slow the economy, and looked ahead to the upcoming earnings season for signs of what impact inflation is having on corporate profits,” Ord Minnett research analysts wrote to clients on Tuesday as reported by Reuters.
World markets have been hit hard in the past few months on worries the Ukraine war, Fed’s tightening and China’s tough new COVID-19 restrictions could set back global growth.
U.S. consumer price index data is expected to be announced on Tuesday which is expected to at 8.4% year-over-year according to Reuters forecast.
“We’re quite hawkish in terms of U.S rate hikes and we think it’s not just the amount of tightening but the pace which is going to impact investors,” Elizabeth Tian, Citigroup equity derivatives director in Sydney told Reuters.
“Equities markets have been very resilient and quite relaxed compared to the fixed income markets but we’re expecting at the Fed’s May meeting there will be some kind of announcement in term of quantitative easing tapering and that is when we could see the volatility emerging in equities.
“The question is going to be how do markets react to the velocity of rate hikes we could see.”
U.S. crude ticked up 0.85% to $95.09 a barrel. Brent crude rose to $99.18 per barrel.