Asian stock markets fall, dollar strengthens after Powell re-nominated Reuters

© Reuters. File photo: On June 21, 2021, a man looks at an electronic board displaying the Nikkei index outside a brokerage company in the business district of Tokyo, Japan. REUTERS/Kim Kyung-Hoon

Author: Wu Kaien

HONG KONG (Reuters)-Asian stock markets mostly fell on Tuesday, following the decline of Wall Street. Prior to that, US President Joe Biden (Joe Biden) chose Fed Chairman Jerome Powell (Jerome Powell) to re-elect Fed Chairman. Anticipation of rapidly curtailing stimulus measures.

MSCI’s measure of stocks in the Asia-Pacific region outside of Japan fell 0.49%, while the opening prices of the Hong Kong and China benchmark CSI 300 Index fell 1.1% and 0.2%, respectively.

Boosted by mining and energy stocks, the Australian stock market rose 0.55%. The Japanese market is closed for public holidays.

Due to the surge in COVID-19 cases in Europe and new restrictions, higher-risk assets have shaken again in recent trading days, frustrating investors’ hopes for a faster recovery in global consumption and growth.

Germany’s outgoing Chancellor Merkel said that the latest surge is the worst that the country has experienced so far, and that Austria entered a new state of blockade on Monday.

Overnight on Wall Street, President Biden appointed Powell to continue to serve as chairman of the Federal Reserve, and another candidate, Lal Brainard, became vice chairman, falling back from a historical high.

TD Securities analysts said in a report: “The U.S. dollar looks expected to continue to rise after Powell’s re-nomination, because this leaves room for the market to shrink faster.”

ANZ analysts agreed, and stated in a report to clients that Powell’s news triggered “expectations that the reduction will accelerate and interest rates will increase starting in June 2022”.

The chatter of US interest rates has maintained good support close to the 16-month high. In early trading on Tuesday, the U.S. dollar against the yen was also close to a 4-1/2-year high.

Powell’s current tenure has proven beneficial to risky assets, and the Standard & Poor’s index has risen 69.7% since he took office.

U.S. Treasury yields have risen, driven by the two-year Treasury bonds, which usually coincides with interest rate expectations. It reached its highest level since early March 2020.

In commodities, 0226 GMT rose 0.19% to US$1,808.4 per ounce, recovering Monday’s decline. The price of gold is under pressure because Powell’s nomination promotes expectations that the central bank will continue to cut economic support.

There are reports that if large consumer countries release crude oil from their reserves or the coronavirus pandemic suppresses demand, OPEC+ may adjust its plan to increase oil production, so oil prices are losing money again after a brief rebound from the recent decline the day before .

0226 GMT fell 0.21% to US$79.53 per barrel, and fell 0.5% to US$76.38 per barrel.

According to an earlier report by Reuters, the US Department of Energy is expected to announce on Tuesday that it will coordinate with other countries to borrow from the Strategic Petroleum Reserve.

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