- Asian equities remain pressured amid hopes of monetary policy tightening, challenges to growth.
- US stimulus expectations fail to recall bulls amid Sino-American tussles.
- RBA refrains from intervention despite firmer yields, Debelle cites inflation fears.
- US GDP eyed to confirm Fed tapering tantrums, ECB on the watcher’s list too.
Asia-Pacific markets print losses during early Thursday as investors fear an end to the easy money policies even when the world isn’t fully recovered from the pandemic-led losses. While portraying the mood, the MSCI’s index of Asia-Pacific shares outside Japan drops 0.22% while Japan’s Nikkei 225 portrays 1.0% daily loss heading into the European session.
Market sentiment dwindles amid firmer US Treasury yields, ignoring the mildly bid S&P 500 Futures. That said, the US 10-year Treasury yields consolidate the heaviest daily fall since mid-August, recently picking up bids to 1.55%, up 2.6 basis points (bps).
The underlying reasons could be linked to the Bank of Canada’s (BOC) end of bond purchases as well as the UK’s tapering news. Further, the RBA Deputy Governor Guy Debelle also accepted the fears of heating inflation pressure inside the Pacific economy, indirectly signaling the rate hike woes.
It’s worth mentioning that US-China tussles escalate over telecom, Taiwan and Afghanistan while the policymakers in the White House push for faster progress on the stimulus and budget talks.
Amid these plays, shares indices from Australia and New Zealand fall around half a percent whereas those from China and Hong Kong replicate the downside moves. South Korea’s KOSPI bucks the trend with mild gains whereas Indonesia’s IDX Composite and India’s BSE Sensex remain on the backfoot.
The market fears could also be witnessed in the commodity prices but the US dollar index struggles to cheer the cautious moves as traders await the preliminary readings of the US Q3 GDP. Although the downbeat expectations from the US GDP can challenge the Fed tapering concerns, multi-year high inflation expectations and global bond rally, coupled with the steepening of the yield curves underpin fears of the tighter monetary policy and exert downside pressure on the equities.
Read: US Third Quarter GDP Preview: A most uncertain estimate
