Asia markets dive as volatility sweeps globe ahead of Fed meeting

HONG KONG - Asian markets plunged Tuesday following a highly volatile day on Wall Street fuelled by fears about the Federal Reserve's plans to hike interest rates, with attention lasered on its upcoming two-day policy meeting.

A disappointing start to the corporate earnings season, as well as growing concern about Russia's troop build-up on Ukraine's border and warnings of a possible invasion were also dragging on sentiment.

After spending much of last year playing down the spike in prices, the US central bank has in recent months taken a sharp hawkish turn on monetary policy as officials look to bring inflation -- which is at a four-decade high -- under control.

Minutes from the most recent meeting indicate it will begin lifting interest rates from March with three or possibly four more hikes before the end of the year. On top of that, it plans to start offloading its vast bond holdings.

But while the move to battle runaway prices is seen as crucial, the end of the era of ultra-cheap cash for investors has rattled markets after almost two years of uninterrupted gains to record or multi-month highs.

All attention is on the Fed gathering that starts later in the day, with investors poring over every word from the bank's statement and boss Jerome Powell's subsequent news conference.

"The Fed is scrambling to control inflation and markets have gone from expecting a gradual interest rate hiking cycle to an accelerated tightening action until inflation eases," said OANDA's Edward Moya.

"Some economists think the Fed needs a half-point rate increase in March to show they are serious about tackling inflation and signal that more are coming."

He added that officials need to "send a message they are tackling inflation, but they don't need to overcommit themselves. The Fed's best option is to signal they will raise rates by 25 basis points in March and signal another one is coming in May. Inflation may show its peak around then and they may not need to be as aggressive going forward."

Wall Street's three main indexes have had a particularly rough time, with the Nasdaq down more than 10 percent from recent peaks, putting it in correction territory.

And on Monday they saw some wild gyrations, suffering intra-day losses before dip-buying saw them all surge in the last hour to end in positive territory.

London, Paris and Frankfurt tanked Monday, without enjoying any recovery, with eyes on eastern Europe as the United States said 8,500 troops were put on standby for possible deployment to boost NATO as fears grow that Russian President Vladimir Putin is planning to invade Ukraine.

But all three markets rose in opening trade Tuesday.

"Volatility is back," Lori Calvasina, at RBC Capital Markets, told Bloomberg Television. "We're having a sea-change in terms of Fed policy. Equity investors frankly have been behind the curve in anticipating what's coming, so there's a lot of catch-up to do."

Asia spent all Tuesday well in the red with Tokyo down 1.7 percent as Hong Kong shed 1.7 percent, while Singapore, Taipei and Jakarta were also off more than one percent.

Sydney shed 2.5 percent after higher-than-forecast Australian core inflation figures ramped up bets on a rate hike by the country's central bank. 

Shanghai and Seoul fell more than two percent, with Wellington, Mumbai and Bangkok also down.

While there is a general consensus that the long-term outlook for markets remains positive -- thanks to reopenings, vaccination programmes and the less-severe Omicron variant -- many also warn of more near-term upheaval.

Jeremy Siegel, at the Wharton School of the University of Pennsylvania and author of "Stocks for the Long Run", said: "I'm still very positive on long-term equities but I think it's in for a rocky time the next two or three months.

"We have to get used to the fact that the Fed is going to be much more hawkish."

Agence France-Presse

Asian equities mostly up after US, China tariff moves

HONG KONG, China — Asian investors on Thursday cheered Donald Trump's decision to delay a hike in tariffs on Chinese goods and Beijing's announcement that it would remove a range of US products from its own planned levies.

The moves signal an easing of tensions between the two economic superpowers ahead of a much-anticipated meeting of top-level negotiators next month.

They also provided an extra shot in the arm for investors as they await key announcements from the US and European central banks that are expected to see a further easing of monetary policy.


In a tweet on Wednesday night, Trump said: "We have agreed, as a gesture of good will, to move the increased Tariffs on 250 Billion Dollars worth of goods (25% to 30%), from October 1st to October 15th."

He added that the delay was requested by "Vice Premier of China, Liu He, and due to the fact that the People's Republic of China will be celebrating their 70th Anniversary", on October 1.

Earlier in the day, China said it would temporarily exempt 16 categories of US exports from tariff increases in an olive branch to Washington before the talks take place and which Trump described as "a big move".

The more conciliatory tone from both sides -- after months of rancour -- fuelled hopes they can edge towards a solution to their long-running trade war, which has jolted the global economy and stock markets.

The delay "shows Trump doesn't want to increase tariffs before the trade talks in early October and it creates good conditions", said Tommy Xie, an economist at Oversea-Chinese Banking Corp. "It adds to the hope that there'll be good news from the October meeting, and markets will wait and see."

Wednesday's developments were broadly welcomed though Asian markets struggled to hold on to initial rallies owing to profit-taking from a healthy run-up this week.

Central banks in focus

Tokyo ended the morning 0.8 percent higher and Shanghai added 0.2 percent while Sydney climbed 0.5 percent. Wellington and Taipei also rose, as did Jakarta, but Hong Kong dipped 0.2 percent.

Jun Inoue, a senior economist at Mizuho Research Institute, said Trump's move indicates he "can be flexible to get concessions from China and that he’s not trying to punish Beijing at any cost".

The apparent easing of trade tensions boosted oil prices as the prospect of an end to the row revived hopes for demand.

However, the gains followed a sharp drop for both main contracts as traders bet on a possible return of Iranian crude to the market after the firing of Trump's hawkish national security adviser John Bolton eased fears of a conflagration in the Middle East.

Traders are now turning their attention to Frankfurt, where the European Central Bank is expected to unveil economy-boosting stimulus. While the exact measures are unknown observers say it could cut interest rates deeper into negative territory or a new mass bond-buying drive, among other things.

Then, next week the Federal Reserve meets, with speculation rife that it will lower borrowing costs again, which would please Trump, who in a Twitter outburst on Wednesday said they should "BE BROUGHT WAY DOWN".

In share trading, Hong Kong Exchanges and Clearing sank more than three percent after its shock bid of almost US$40 billion for the London Stock Exchange Group on Wednesday.

Reports said the proposal is likely to fail, however, as it is dependent on the LSEG scrapping a planned $27 billion takeover of US financial data provider Refinitiv, which the three-centuries-old exchange said it "remains committed" to buying.

There are also concerns about ongoing unrest in Hong Kong and the influence of China in the group, the Financial Times reported.

source: philstar.com

Most Asian markets up but trade fears stalk investors

HONG KONG — Asian markets mostly rose Wednesday, building on a positive start to the week as investors are cheered by healthy earnings but uncertainty caused by the US-China trade row is keeping optimism in check.

Wall Street provided another strong lead with the Nasdaq approaching a record high, while energy firms in Asia pressed on with their rally following more gains in oil prices.

Hong Kong was 0.1 percent higher in early trade while Tokyo ended the morning session 0.4 percent up and Sydney edged 0.3 percent ahead. Seoul, Wellington and Taipei all posted gains but Shanghai dipped 0.6 percent.

While the gains are welcome, traders remain on edge for any new developments in the trade saga between the world's top two economies.

On Tuesday the US said Donald Trump's 25 percent tariffs on a further $16 billion of Chinese goods will kick in on August 23. That is on top of the measures imposed on $34 billion of imports last month.

The move had been widely expected but with China lining up retaliatory measures it reinforced worries that the two sides are heading for an all-out trade war that could hammer the global economy. The White House has also lined up another $200 billion to target in future.

The yuan got some support after a Bloomberg News report said the Chinese central bank had emphasised the need for currency stability to the country's lenders as it looks to halt a slide in recent months.

It said officials called on bosses to prevent "herd behaviour" and momentum-chasing moves in the forex markets, fearing a run on the yuan similar to 2015-16, which hammered the unit and sent global markets into a tailspin.

The report comes after Friday's move by the People's Bank of China to make it harder to bet against the currency.

"This move is consistent with what the PBoC did earlier -- it can be considered as preemptive efforts made to slow the yuan’s depreciation, prevent one-sided bets on weakness and avoid a sense of panic," Eddie Cheung, Asia foreign-exchange strategist at Standard Chartered in Hong Kong, told Bloomberg.

Energy firms remain popular as oil prices rise on the back of worries about the trade row and a drop in Saudi Arabian output.

Both main contracts were flat in Asia after clocking up big gains on Tuesday.

Prices also got support from the US reimposing a first round of sanctions on Tehran after leaving the nuclear deal, with an embargo on the country's crude exports in November.

Trump warned other countries against doing business with Iran in the face of the sanctions, saying they would be refused from trading with the United States.

"The entreaty of the Americans that anyone who will do business with them (Iran) won't be able to do business in the US is something to watch," said Greg McKenna, chief markets strategist at AxiTrader.

Key figures at 0230 GMT

Tokyo - Nikkei 225: UP 0.4 percent at 22,750.48 (break)

Hong Kong - Hang Seng: UP 0.1 percent at 28,282.28

Shanghai - Composite: DOWN 0.5 percent at 2,764.45

Euro/dollar: UP at $1.1602 from $1.1597 at 2130 GMT

Pound/dollar: DOWN at $1.2936 from $1.2938

Dollar/yen: UP at 111.40 yen from 111.37 yen

Oil - West Texas Intermediate: UP five cents at $69.22 per barrel

Oil - Brent Crude: DOWN seven cents at $74.58 per barrel

New York - Dow Jones: UP 0.5 percent at 25,628.91 (close)

London - FTSE 100: UP 0.7 percent at 7,718.48 (close)

source: philstar.com

Asian stocks rise as solid US performance lifts spirits

SINGAPORE — Asian markets climbed higher on Wednesday as a sweep of positive news from Wall Street and beyond boosted confidence in the U.S. economy.

KEEPING SCORE: Japan's benchmark Nikkei 225 gained 1.0 percent to 22,921.20 and South Korea's Kospi added 0.3 percent to 2,304.64. Hong Kong's Hang Seng gained 0.6 percent to 28,351.53. The Shanghai Composite index added 0.4 percent to 2,808.24. Australia's S&P/ASX 200 climbed 0.8 percent to 6,254.20. Shares rose in Taiwan and Southeast Asia.

WALL STREET: U.S indexes rebounded after a weak start on solid gains for retailers, technology and household goods companies. Prescription drug business Johnson & Johnson and financial services company Charles Schwab posted bullish earnings, adding to the largely positive corporate earnings season. The S&P 500 index rose 0.4 percent to 2,809.55. The Dow Jones Industrial Average gained 0.2 percent to 25,119.89. The Nasdaq composite jumped 0.6 percent to 7,855.12, surpassing the record high it set last week. The Russell 2000 index of smaller-company stocks climbed 0.5 percent to 1,687.26.

UPBEAT FED COMMENT: Delivering his twice-a-year report on monetary policy to Congress, Federal Reserve Chairman Jerome Powell said he expects the job market to remain robust and inflation to hover around the Fed's 2 percent target for the next few years. Stocks have fallen after Powell's previous major addresses, but not on Tuesday.

U.S. INDUSTRIAL PRODUCTION: The Fed said U.S. industrial production, including output at factories, mines and utilities, climbed 0.6 percent in June. It fell 0.5 percent in May after a fire disrupted production of Ford Motor's F-series pickup trucks, America's bestselling vehicle. U.S. manufacturing still looks healthy despite trade conflicts with China, Europe and Canada and a rising dollar that makes U.S. products more expensive abroad.

ANALYST VIEWPOINT: "While earnings and the highly-watched testimony to Senate by Fed chair Powell played a part, movements remained largely muted with the likes of the Dow and the S&P 500 index clocking only moderate gains overnight," Jingyi Pan of IG said in a commentary.

ENERGY: Benchmark U.S. crude dropped 34 cents to $67.74 per barrel in electronic trading on the New York Mercantile Exchange. The contract was relatively unchanged at $68.08 in New York on Tuesday. Brent crude, used to price international oils, shed 30 cents to $71.86 per barrel.
CURRENCIES: The dollar rose to 112.95 yen from 112.83 yen late Tuesday. The euro eased to $1.1654 from $1.1664.

source: philstar.com