Asian stocks fall as Fed fears push Wall St into bearish market

HONG KONG, June 14 (Reuters) – Asian stocks fell sharply and the safe-haven dollar remained near a two-decade high on Tuesday after Wall Street hit a bearish bearish market. aggressive US interest rates would boost the world’s largest economy. in recession.

MSCI’s largest Asia-Pacific stock index outside of Japan (.MIAPJ0000PUS) fell 0.45% in volatile trading, recovering some of its previous losses.

The Australian benchmark S & P / ASX200 (.AXJO) closed 3.55% lower, while the Japanese Nikkei Index (.N225) fell 1.32% after falling up to 2% at the beginning of the session.

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The negative tone in Asia followed a bleak U.S. session on Monday, in which Goldman Sachs forecast a 75 basis point rise in interest rates at the next Federal Reserve policy meeting on Wednesday. Read more

However, it seemed that investors were shaking with sadness towards European trade with the Euro Stoxx 50 pan-regional futures 0.83%, the German DAX futures 0.9% higher and the futures of the FTSE 0.62%. US stock futures also rose 1.17%.

“While there is clearly a risk of a major tightening of policy, a total recession is unlikely, with the unemployment rate rising by two percentage points or more,” said Stephen Koukoulas, CEO. of the Canberra market. Economy.

“Rather, it is certain that growth will slow down – which is the goal of tightening policy – and by the end of this year, inflationary pressures should begin to ease.”

In Hong Kong, the Hang Seng Index (.HSI) reduced previous losses to 0.26% after trading in negative territory for most of the day. China’s CSI300 index (.CSI300) regained some of its lost ground to 0.23%.

Expectations of aggressive rate hikes in the US have risen after inflation for the year to May shot up 8.6% more than expected.

“The U.S. market is the largest in the world, so when it cools the rest of the world it does too,” said Clara Cheong, global market strategist at JP Morgan Asset Management.

“There will be short-term volatility in Asia, but we believe that in the medium and long term in Asia without Japan, earnings expectations have already been lowered, so there is a relatively brighter outlook here than in others. parts of the world “.

Cheong said China’s monetary easing and the reopening of ASEAN economies from the COVID-19 blockades could protect the region from some of the financial market crashes.

On Wall Street overnight, fears of a recession in the United States fell the S&P 500 (.SPX) by 3.88%, while the Nasdaq Composite (.IXIC) lost 4.68%. The Dow Jones Industrial Average (.DJI) fell 2.8%.

The benchmark S&P 500 is now down more than 20% from its most recent record high, confirming a bearish market, according to a commonly used definition.

10-year Treasury benchmark yields peaked on Monday since 2011 and a key portion of the yield curve was reversed for the first time since April as investors prepared for the outlook that attempts by the Fed to curb rising inflation would affect the economy.

The yield on 10-year Treasury bonds rose to 3.3466% compared to the close of the U.S. at 3.371% on Monday. The two-year yield, which is rising with expectations of higher-rate traders from Fed funds, touched 3.3804% compared to a U.S. close of 3.281%.

In the foreign exchange markets, the dollar index, which tracks the dollar against a basket of major currencies, stood at 104.98, right next to a two-decade high of 105.29. Monday. Read more

Against the Japanese yen, the US currency was at 134.59, just below its recent high of 135.17.

The single European currency rose 0.2% to $ 1.0432, after losing 2.8% in one month.

Bitcoin fell about 4.5% on Tuesday to $ 21,416, a new 18-month low, extending the 15% drop on Monday as markets were shaken by cryptocurrency lender Celsius, which suspended withdrawals . Read more

Oil markets began to recover at the end of the Asian session, with US oil rising 0.13% to $ 121.08 a barrel, after most of the Tuesday. Brent crude consolidated slightly at $ 122.42 a barrel.

Gold rejected a weaker start with the spot price gaining 0.42% to $ 1,826.65 per ounce.

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Report by Scott Murdoch in Hong Kong; Additional report by Alun John; Editing by Sam Holmes

Our standards: Thomson Reuters’ principles of trust.

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