Asian shares, U.S. futures slide as traders fret about Ukraine, rate rises

An electronic price board is displayed inside a conference hall in Tokyo, Japan on November 1, 2021. REUTERS/Issei Kato

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HONG KONG (Jan. 25) (Reuters) – Asian stocks and U.S. futures fell on Tuesday after a tumultuous session on Wall Street, with investors worried about the situation in Ukraine and eyeing the U.S. Federal Reserve amid fears of a move toward tighter monetary policy globally.

On Monday, NATO said it was putting its forces on alert and bolstering Eastern Europe with more ships and combat aircraft, in what Russia called Western “hysteria” in response to its massing of troops on the Ukrainian border. Read more

MSCI’s broadest index of Asia Pacific shares outside Japan (.MIAPJ0000PUS) slid 1.2%, falling to its lowest level in a month, and Japan’s Nikkei (.N225) slumped 2% to its lowest level since August.

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There was a sharp decline across the region. Hong Kong (.HSI) lost 1.64% and Korea’s Kospi (.KS11) lost 1.67%. The Australian benchmark index (.AXJO) fell 2.73% to an eight-month low, also weighed down by rising inflation on Tuesday morning that fueled fears of a rate hike imminent below. AZN0236PW

Carlos Casanova, chief economist at UBP, said Asian markets were lower due to concerns about faster rate hikes in the United States, escalating tensions over Ukraine, rising inflation and higher oil prices.

“But on the upside, valuations are becoming more attractive and earnings growth is still strong for some sectors. So I think we will see a tug of war in the market this week,” he said.

US futures also fell in Asian trading hours, Nasdaq (.NQc1) futures fell 1.2% and S&P 500 futures lost 0.95%, after US stock markets rebounded strongly late in the session to close higher, offsetting Severe losses that occurred earlier in the day, with a deal. – Investors asked to buy shares.

The Dow Jones Industrial Average (.DJI) finished 0.29% higher, the S&P 500 (.SPX) added 0.28%, and the Nasdaq Composite (.IXIC) was up 0.63%.

Keeping traders on edge, the Federal Reserve will begin its two-day meeting later on Tuesday, as investors have begun speculating that there is little chance that they will announce a surprise rate hike.

Investors are also anxiously looking for clues about the timing and pace of rate hikes expected later this year. Money markets were pricing in the first rate hike in March, with three more quarter-point increases by the end of the year.

However, benchmark US Treasuries were far from some speculation. The benchmark 10-year bond yield was 1.76%, flat on the day, after ending a choppy day of trading on Monday near where it started.

The Reserve Bank of Singapore also tightened monetary policy on Tuesday in an out-of-cycle move. Read more

Market nerves caused the dollar to rise against most of its peers. The dollar index was at 95.922, hovering near a two-week high, after rising 0.29% overnight. FRX

The Australian dollar rose briefly after inflation picked up, but failed to hold on to its gains and the risk-friendly currency was still hovering near a one-month low hit the day before.

Oil prices also rose, which added to the anxiety of equity investors. US crude rose 0.5 percent to $83.73 a barrel, and Brent crude rose at $86.83, up 0.65 percent.

Gold held on to its recent gains as investors sought safety. The spot was at $1,841 an ounce, flat on the day but near a two-month high last week at $1,847.7.

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Additional reporting by Selena Lee, Shi Yu, and Elon John; Editing by Richard Boleyn

Our Standards: Thomson Reuters Trust Principles.

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