Asian stocks weakened as a result of the Fed and China. Most Asian stock markets remained in a small range on Tuesday. Traders awaited more clues on US monetary and fiscal policy from a variety of Federal Reserve indicators in the week. Attention remained focused on Chinese economic growth.
Asian stocks declined, led by Hong Kong and China
The Hang Seng index in Hong Kong was the weakest performer of the day, dropping 1.6 percent on losses in heavyweight technology stocks.
JD.com (HK:9618), a Chinese search engine, plunged 7 percent and was the poorest performer on the index. As media reports stated the company was intending a subsidy initiative.
HSBC Holdings PLC (LON: HSBA) Hong Kong shares (HK:0005) tumbled 0.6 percent after the bank reported a $1.4 billion drop in annual profit.
HSBC Holdings PLC (LON: HSBA) Hong Kong shares (HK:0005) tumbled 0.6 percent after the bank reported a $1.4 billion drop in annual profit.
However, the bank reported a nearly 100 percent increase in 4th earnings and stated that it was going to consider a special bonus.
Asian Stocks: Investors seek optimism.
k Investors are looking for some positive news from ChinaThe Shanghai Shenzhen CSI 300 and Shanghai Composite indexes in China fell as hope about additional government spending initiatives faded.
The People’s Bank of China kept its key mortgage lending rates at historical lows on Monday in order to support domestic economic growth.
After the country relaxed most anti-COVID measures in Jan. Hopes for Chinese economic growth have driven a rally in Asian stocks this year. A recovery in China aligns with the country’s regional trading partners. Nonetheless, the latest economic metrics from the country touch a somewhat different picture of relief.
Markets wait for PCE data and US Fed further statements
The broad Asian markets shifted little, with attention turning to the minutes of the Federal Reserve’s February meeting, which are due on Wednesday.
The minutes are widely expected to reiterate the central bank’s hardline argument. Implying further increases in interest rates as the bank seeks to encompass inflation.
Market forces are also anticipating a reading on the Personal Consumption Expenditures index. The Fed’s preferred inflation gauge, as well as various speeches from Fed authorities.
Soaring US interest rates are bad news for Asian stocks because they limit the foreign flow of capital into the area and raise regional borrowing costs.
The ASX 200 index in Australia fell 0.2%, pushed down by setbacks at big miner BHP Group Ltd (ASX: BHP. Following a decline in bi-annual earnings.
The Nifty 50 and BSE Sensex 30 indexes in India grew 0.3 percent and 0.4 percent, respectively, whereas the Nikkei 225 index in Japan tumbled 0.2 percent.
Precious Metal: Gold Starts Poorly
During a two-day winless skid, gold bears hook up with intraday low points, while Friday’s wobble off a 7-week low starts to fade.
As risk aversion enters the return of full markets to support the US Dollar, The gold price (XAUUSD) falls toward the previous weekly drop. Also, the lowest since late Dec. Upbeat US Treasury bond yields may be supporting the US dollar while weighing on the XAUUSD.
However, global political concerns about China and Russia appear to be driving the newer rush toward risk avoidance. Following the strong US data, there is renewed concern about the Federal Reserve’s (Fed) aggressive push.
Nevertheless, the cautious mood ahead of the preliminary readings of the US Purchasing Managers Index (PMI) data for February appears to be a challenge to the Gold price.
The details of the Federal Open Market Committee’s (FOMC) Monetary Policy Conference on Wed are also crucial.
Forex Markets Perspective and Insights
During its 3 unbeaten runs, the USDJPY has maintained modest gains. The USDJPY oscillates around an intraday top just next to 134.40 as bulls maintain control for the third day in a row in early Tuesday morning Europe.
In doing so, the Yen pair also posts minor gains near its highest levels in 2 months, which were reached on Friday.
Technical View
Nonetheless, the 200-day EMA unites some upward trend from Feb 02 to constrain the USDJPY duo’s urgent drop is near 133.80. However, the 100-day EMA level around 134.75 protects the upside.
Even so, the bullish MACD cues and descending triangle bullish formation on the graph keeps buyers of the USDJPY duo optimistic.
However, the current top around 135.10, which was marked on Weekend, functions as just an added filter towards the north past a 100-day EMA band
Having followed that, a spin to 138.20 by mid-Dec, 2022, cannot be ruled out. However, the 140.00 psychological poles may present a challenge to Yen duo buyers later on.
USD Index (DXY)
The USD Index reclaims its grin and advances well beyond 104.00. The index gains some upward momentum near 104.00. Following the holiday on Monday, US markets resume normal operations.
The lukewarm offered posture in the risk-associated market and a slight increase in US rates prior to the opening bell in Euroland. It might help the index turn around two consecutive daily selloffs so far on Tuesday and retake the crucial 104.00 regions.
Meanwhile, market players are expected to stay careful in light of the issuance of the FOMC Minutes. And, the release of PCE inflation figures on both Wed and Fri.
Fundamental Prediction
In the meantime, given the release of the FOMC details on Wed and the PCE inflation data on Fri. As well as the ongoing general debate between market expectations of the Fed’s next moves. And, the hardline narrative from policymakers. Market players are anticipated to remain on the cautious side.
Relevant Dollar Index levels
The next obstacle is at 104.66 (month top Feb 27). Followed by 105.63 (2023 high Jan 6) and afterward 106.44. The index is now up 0.15 percent at 104.03. (200-day SMA).
But, a break of 102.58 (the weekly low for February 14) would allow for a move to 100.82 (the 2023 bottom on Feb 2) and ultimately 100.00. (psychological mark).
Key Economic Events Schedule (February 21)
