SYDNEY, Feb 7 — Asian share markets stabilised somewhat today after steep losses in the past 24 hours, while the U.S dollar remained elevated as investors considered the prospects interest rates would remain higher for longer in many developed economies.
MSCI’s broadest index of Asia-Pacific shares outside Japan bounced slightly 0.4 per cent, after US stocks ended the previous session with mild losses. The index is up 0.8 per cent so far this month.
Australia’s S&P/ASX200 was up 0.13 per cent and Japan’s Nikkei stock index rose 0.26 per cent.
Hong Kong’s Hang Seng Index opened up 0.68 per cent and China’s bluechip Index was 0.3 per cent higher in early trade.
The Reserve Bank of Australia (RBA) is expected to extend its monetary tightening campaign when it meets later in the day.
The central bank is likely to lift the official cash rate by another 25 basis points to 3.35 per cent, according to economists polled by Reuters. The decision will be announced at 0330 GMT.
“Sentiment in markets is dominated by central banks and the repricing of rates yet again,” Kerry Craig, JPMorgan Asset Management’s global market strategist, told Reuters.
“Equities have had a strong run since the start of the year so seeing an air pocket emerge now is no major surprise.
“It’s a quiet week for economic data globally and when that is the case uncertainty over interest rates is the dominant theme among investors.”
In the Asian trading session, the yield on benchmark 10-year Treasury notes hit 3.6268 per cent compared with its US close of 3.632 per cent yesterday.
The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 4.4368 per cent compared with a US close of 4.456 per cent.
The repricing of higher rates began after strong U.S jobs growth in January, with employment rising 517,000, more than double economists expectations. The unemployment rate hit 3.4 per cent, the lowest in more than 53 years.
Investors will be closely watching a speech by Federal Reserve Chairman Jerome Powell at the Economic Club of Washington later on Tuesday.
Overnight on Wall Street, the Dow Jones Industrial Average fell 0.1 per cent, the S&P 500 lost 0.61 per cent and the Nasdaq Composite dropped 1 per cent.
“The market has repriced to expect that the Fed Funds rate will peak just above 5 per cent and it now only anticipates very limited rate cuts, just one of 25 basis points by the end of this year,” ANZ economists wrote.
“It’s very clear that sentiment is fragile and data dependent, and this new defensive posture may have further to run near term as risk positions are scaled back.”
The dollar eased 0.04 per cent against the yen to 132.6, after touching a three-week high of 132.9 during the U.S trading session.
The European single currency was up 0.1 per cent on the day at US$1.0736, having lost 1.16 per cent in a month.
The dollar index, which tracks the greenback against a basket of major trading partner currencies, was down marginally at 103.47 from its US trading levels. However, it remains well above its recent low of 101.55 on February 3.
US crude ticked up 0.9 per cent to US$74.78 a barrel. Brent crude rose to US$81.69 per barrel.
Gold was slightly higher. Spot gold was traded at US$1871.65 per ounce. — Reuters