Asia Shares Dip as Investors Digest Private Industrial Activity Data

Asian markets fell on Tuesday as the probability of the US Federal Reserve maintaining its hawkish stance impacted on sentiment, with investors looking to regional private surveys for industrial activity.

Australia’s S&P/ASX 200 declined 0.33% as of 9.29 AM (Thai time), as traders processed the increase in the country’s Judo Bank composite purchasing managers’ index to 49.2, which is below the 50-mark separating expansion from contraction.

The minutes from the Reserve Bank of Australia’s policy meeting in February were made public, and it reflected governor Philip Lowe’s view that more rate hikes will be necessary.

Japan’s manufacturing PMI dropped to 47.4 from January’s 48.9, prompting the Nikkei 225 to trade flat.

Meanwhile, the Kospi in South Korea gained 0.22%.

The Hang Seng index in Hong Kong saw a decline of 0.43%. The Shanghai Composite Index in mainland China rose by 0.36%.

While U.S. markets were closed on Monday for Presidents Day, U.S. futures dipped on Monday night, following a week in which increased interest rates dampened investor optimism.

Futures for the Dow Jones Industrial Average lost 88 points (0.3%). Futures for the S&P 500 and the Nasdaq 100 both fell by 0.3% and 0.2%, respectively.

Concerns that interest rates in the United States may need to climb further and remain higher for longer were bolstered by a slew of strong economic statistics.

The market is pricing in a peak in U.S. interest rates of 5.30% in July and over 5% through the end of the year, a shift away from forecasts of deeper rate reduction this year.

This week, investors are anticipating the release of the minutes from the Federal Reserve’s latest meeting, at which interest rates could be increased by 25 basis points, on Wednesday.