Asian shares stutter, dollar buoyant as data supports hawkish Powell

https://tmsnrt.rs/2zpUAr4China stocks swing, yuan weakens on soft inflation data Nikkei rises 0.6%, yen gains as Ueda approved as next US BOJ governor. 2-year yields near 15-year, dollar near 3-month high, Powell reaffirms tough guidance, size of March hike not over

SYDNEY, March 9 (Reuters) – Asian shares faltered as the dollar edged near a three-month high on Thursday after a string of overnight economic data appeared to support Federal Reserve Chairman Jerome Powell’s hawkish guidance for further increase in interest rates.

Caution is set to extend to Europe ahead of the release of February US payrolls data, with Euro Stoxx 50 futures across the region down 0.2%. Both the S&P 500 and Nasdaq futures were down 0.2%.

In his second day on Capitol Hill, Powell stuck to his message of higher and potentially faster interest rate hikes, but stressed that the debate was still ongoing with a decision dependent on data that to be issued ahead of the US central bank’s policy meeting in two weeks.

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

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

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

Job openings remain high, private payrolls beat consensus estimates and home loan demand increased despite higher mortgage rates.

“It’s hard to see this as a clarification of the employment picture ahead of tomorrow’s payrolls release, which remains a lottery,” said Robert Carnell, regional head of research, 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 future hikes and that no decision on the size of the March increase. done.”

Major U.S. stock indexes fluctuated 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 posting a modest loss.

Investors are now focused on February jobs data due on Friday to confirm that strong job growth supports larger rate hikes.

Forecasts center on a more modest increase of 205,000, after January’s jump of 517,000 caused markets to reprice their expectations of monetary tightening.

Financial markets have priced in a 78.6% probability of a 50 basis point hike in the key interest rate at the end of the Fed’s March meeting, up from about 30% earlier in the week, according to CME’s FedWatch tool.

The US dollar index, which measures the greenback’s value against a basket of major peers, held close to a three-month high of 105.57. However, it lost 0.4% against the Japanese yen to 136.78 per dollar.

Japan’s lower house of parliament on Thursday approved the government’s nominee Kazuo Ueda to be the next central bank governor, signing a new leadership tasked with leading a smooth exit from ultra-loose monetary policy.

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

Ten-year government yields hit the BOJ’s policy limit of 0.5% again on Thursday.

The greenback was also buoyant against the Canadian currency at C$1.3803, a four-month high, thanks to a weak Bank of Canada, which

The central bank left interest rates on hold 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 portion of the U.S. Treasury yield curve that measures the gap between two-year and 10-year Treasury note yields was at negative 108.2 basis points, the most inverted since 1981. An inversion such is seen as a reliable indicator of recession.

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

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

Editing by Shri Navaratnam and Sam Holmes

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