TOKYO / NEW YORK (Reuters) – Asian stocks fell on Wednesday, following Wall Street as investors waited to see if the U.S. Federal Reserve would point to a faster path to policy normalization than previously expected.
The US central bank ends a meeting two days later.
A regional equity index that excludes Japan fell 0.5%, led by the decline in Kospi, South Korea.
Shanghai’s composite index lost 0.3% and Hong Kong’s Hang Seng fell 0.3%.
The Japanese Nikkei 225 was flat to slightly lower, while the broader Topix index reduced the upward trend by 0.1%.
European equities are expected to open weaker, and Stoxx 50 euro region futures will fall 0.1%. Futures FTSE also fell in early operations.
Global markets have been hit in recent weeks by a drop in Treasury that saw benchmark yields soar to a one-year high as bond investors pledged to accelerate COVID-19 vaccinations and a massive fiscal stimulus would stimulate faster growth and inflation in the world’s largest economy.
Volatility sparked speculation about the possibility that the Fed will be forced to technically adjust the levers that control its policy type, but few expect the central bank to act on it at this week’s meeting, even if it releases forecasts of growth more rosy.
“We expect (President Jerome) Powell that the FOMC will have the tools to intervene if the bond market is disrupted or limits the economic recovery,” Commonwealth Bank of Australia analysts wrote.
“But we expect Powell to backtrack on the discussion about tightening policies because of the large amount of labor market arrows … US bond yields and the US dollar could jump if the post-meeting statement of the FOMC and Powell’s statement are not considered impoverished enough. “
Treasury yields at the 10-year benchmark continued to consolidate around 1.6%, standing at 1.6268% on Wednesday in Asia. They reached 1.6420% on Friday for the first time since February last year.
A dollar tracking index against six major pairs maintained around 91.90 after withdrawing a three-month high of 92,506, touched last week.
The currency market caution can be extended all week, as the Bank of England will announce its policy decision on Thursday and the Bank of Japan will end on Friday a policy review in which it can eliminate a numerical target for the purchase of ‘assets.
On Tuesday, the Dow Jones Industrial Average fell 0.39%, while the S&P 500 lost 0.16%. The Nasdaq Composite rose 0.09%.
On Tuesday, E-mini futures for the S&P 500 fell 0.04%.
Gold prices rose to a two-week high ahead of higher inflation prospects.
Spot gold rose about 0.3% to $ 1,736.55 an ounce.
Brent crude futures rose 33 cents to $ 68.72 a barrel and U.S. crude futures added 40 cents to $ 65.20 a barrel.
Reports by Kevin Buckland; Edited by Kim Coghill and Sam Holmes