Asian stocks stutter, dollar floats as data backs Powell hawk

  • Chinese stocks falter, yuan weakens on weak inflation data
  • Nikkei up 0.6%, yen gains on Ueda’s endorsement as next BOJ governor
  • US 2-year yields near 15-year high, dollar near 3-month high
  • Powell reaffirms hawkish guidance, size of March hike not concluded

SYDNEY, March 9 (Reuters) – Asian stocks faltered as the dollar neared a three-month high on Thursday after a slew of economic data appeared to support the Federal Reserve Chairman’s hawkish forecast. Jerome Powell, on further interest rate hikes.

Caution should extend to Europe ahead of the release of February US payrolls data, with pan-regional Euro Stoxx 50 futures falling 0.2%. S&P 500 and Nasdaq futures were down 0.2%.

On his second day on Capitol Hill, Powell maintained his message of higher and potentially faster interest rate hikes, but stressed that the debate was still ongoing with a decision based on data to be released before the meeting. US central bank policy in two weeks.

MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) fell 0.1% on Thursday, after falling 1.4% the previous session. The Japanese Nikkei (.N225), on the other hand, rose 0.6%.

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China’s blue chips (.CSI300) slipped 0.4% and the yuan weakened 0.2% after weaker-than-expected inflation data for February reignited doubts over the pace of the recovery economic. The Hong Kong Hang Seng Index (.HSI) gained 0.3%.

In the United States, data released overnight painted a picture of a robust economy, doing little to allay fears that the Fed would ease its relentless rate hikes.

Job vacancies remain high, private payrolls have exceeded consensus estimates and demand for home loans has increased despite rising mortgage rates.

“It’s hard to see this as a clarification of the employment situation ahead of the release of tomorrow’s payrolls, which remains a lottery,” said Robert Carnell, regional research manager, Asia-Pacific at ING.

“Although essentially the same message, Powell’s tone yesterday in Congress was seen by many commentators as slightly softer, noting that data would be the final arbiter of the size of the next hike and that no decision on the size of the March hike had not yet been taken.

Major U.S. stock indices oscillated between modest gains and losses throughout the day, with the Nasdaq joining the S&P 500 in positive territory at the closing bell and the Dow Jones posting a modest loss.

Investors are now focusing on February jobs data due Friday to confirm that strong job growth is supporting larger rate increases.

The forecast is centered on a more modest increase of 205,000 after January’s jump of 517,000 led markets to revise their expectations for monetary tightening.

Financial markets have priced the odds of a 50 basis point hike in the Fed’s policy rate at 78.6% after the Fed’s March meeting, up from around 30% at the start of the week, according to the tool. CME’s FedWatch.

The U.S. dollar index, measuring the value of the greenback against a basket of major peers, hovered near a three-month high at 105.57. However, it lost 0.4% against the Japanese yen at 136.78 to the dollar.

Japan’s lower house of parliament on Thursday endorsed the government’s nominee Kazuo Ueda to be the next central bank governor, signing the appointment of new leadership who will be tasked with leading a smooth exit from ultra monetary policy. – accommodating.

The Bank of Japan, however, is expected to keep interest rates ultra-low on Friday.

On Thursday, 10-year government bond yields again hit the 0.5% cap set by the BOJ.

The greenback was also supported against the Canadian currency at 1.3803 Canadian dollars, the highest level in four months, thanks to an accommodating Bank of Canada, which

The central bank left interest rates unchanged on Wednesday, becoming the first major central bank to suspend its monetary tightening campaign.

On Thursday, two-year Treasury yields held near 15-year highs at 5.0600%, while benchmark 10-year yields were mostly flat at 3.9953%.

A closely watched part of the U.S. Treasury yield curve, measuring the spread between two- and 10-year Treasury yields, was at negative 108.2 basis points, the most inverted since 1981. Such an inversion is considered a reliable indicator of recession.

Oil prices were largely flat on Thursday. US crude held steady at $76.64 a barrel. Brent was virtually unchanged at $82.66 a barrel.

Gold was slightly higher. Spot gold was trading at $1,815.95 an ounce.

Editing by Shri Navaratnam and Sam Holmes

Our standards: The Thomson Reuters Trust Principles.

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