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Home / Markets / Stock Markets /  Asia stocks eye mixed start as US Fed holds rates at zero; yields jump

Asia stocks looked set for a mixed start Thursday after Federal Reserve officials sped up their expected pace of policy tightening. U.S. stocks retreated and Treasury yields jumped with the dollar.

Futures were little changed in Japan and Australia, and pointed lower in Hong Kong. The S&P 500 fell, but closed off its lows after Fed Chair Jerome Powell downplayed the risk of an immediate rate increase. Policy makers disclosed that they expect two hikes by the end of 2023 and would begin a discussion about scaling back bond purchases. Ten-year Treasury yields jumped eight basis points, while five- and seven-year equivalents rose more as the market repriced the timing of rate increases.

Crude oil pared earlier gains as the strengthening dollar reduced the appeal of commodities priced in the currency. Gold dropped.

Investors had been looking for some clarity on the Fed’s plans to dial back some of the stimulus that is helping the recovery from the pandemic. Powell said officials had begun a discussion about scaling back bond purchases after releasing forecasts projecting a faster-than-anticipated pace of tightening.

Still, he appeared to throw some cold water on the market’s initial reaction to the dot plot revision, saying the central bank isn’t really thinking about rate increases right now. The Fed pledged to continue asset purchases at a $120 billion monthly pace until “substantial further progress" had been made on employment and inflation.

“The Fed finally had a ‘talking about talking about’ meeting, but financial markets seem confident the Fed already has a progress-dependent tapering plan in mind," said Edward Moya, a senior market analyst at Oanda.

For more market commentary, follow the MLIV blog.

Here are some key events to watch this week:

  • U.S. Treasury Secretary Janet Yellen testifies before a House panel Thursday on the federal budget
  • Rate decisions come from Switzerland and Norway on Thursday
  • The Bank of Japan’s monetary policy decision is on Friday

These are some of the main moves in markets:

Stocks

  • The S&P 500 fell 0.5%
  • The Nasdaq 100 fell 0.3%
  • Nikkei 225 futures fell 0.1%
  • Australia’s S&P/ASX 200 Index futures rose 0.1%
  • Hang Seng Index futures dropped 0.6% earlier

Currencies

  • The yen traded at 110.66 per dollar after slipping 0.6%
  • The offshore yuan was at 6.4392 per dollar
  • The Bloomberg Dollar Spot Index rose 0.9%
  • The euro traded at $1.1996 after dropping more than 1%

Bonds

  • The yield on 10-year Treasuries advanced eight basis points to 1.58%

Commodities

  • West Texas Intermediate crude was little changed at $71.15 a barrel
  • Gold was at $1,811.76 after tumbling 2.6%

More stories like this are available on bloomberg.com

©2021 Bloomberg L.P.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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