© Reuters. FILE PHOTO: A man wearing a protective mask stands in front of an electronic board displaying the Nikkei index outside a brokerage firm in Tokyo, Japan, January 21, 2021. Reuters/Kim Kyung-Hoon
By Kanupriya Kapoor and Stella Qiu
SINGAPORE (Reuters) – Asian shares tumbled on Friday, tracking losses on Wall Street, as lingering concerns over Fed tightening and weaker-than-expected economic and earnings data weighed on the lead up to next week’s Fed policy meeting. market sentiment.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.3%, dragged down by a 2.34% drop in Australia, while the stock index fell 1.47%.
Nasdaq futures fell 1.2% in Asian trade, hurt by Netflix Inc (NASDAQ: Netflix) forecast for weak first-quarter subscriber growth after the close. , down 0.68%.
Europe will continue to decline. In European morning trade, pan-regional shares were down 1.84% and futures were down 1.34%.
“Yesterday’s sell-off in U.S. stocks was brutal and will dominate Asia,” said Rob Carnell, chief economist at ING in Singapore.
“But there is also some optimism, such as a more accommodative move by China on monetary policy,” he added.
The Nasdaq fell 1.3 percent in late U.S. trading as investors anxiously awaited the Federal Reserve’s Federal Open Market Committee meeting next week for details on how it intends to deal with high inflation.
Trends extended to Chinese stocks, with Hong Kong’s benchmark down 0.75% the previous day after its best day in six months, and China’s blue-chip 0.8%, also after rising the previous day.
China slashed its benchmark mortgage rate on Thursday, the latest in a series of monetary easing aimed at boosting an economy deteriorating from a struggling property sector and worries about a variant of the Omicron coronavirus.
This failed to boost markets on Friday, although sources told Reuters that the People’s Bank of China would cut interest rates on loans on its standing lending facility following similar cuts in other liquidity tools.
Analysts at Nomura believe the impact of lower benchmark lending rates will be very limited, as these cuts are too small to have a material impact.
Comments from U.S. Treasury Secretary Janet Yellen on inflation also dampened sentiment, said Kyle Rodda, a market analyst at IG Markets.
“With less than a week to go until the FOMC meeting, investors are worried that the central bank will announce a big rate hike and that it is about to unwind its balance quickly. In effect, it could knock the stock market out to fight inflation.”
Yellen said on Thursday that if the COVID-19 pandemic is brought under control, she believes the Federal Reserve and the Biden administration will take the necessary steps to reduce inflation in 2022.
In commodities, oil prices tumbled on Friday after rising to a seven-year high this week, as a buildup in fuel inventories prompted investors to take profits from the rally.
U.S. crude fell 1.99% to $83.85 a barrel. It fell to $86.82 a barrel.Both benchmarks are up more than 10% so far this year on concerns about tight supply
U.S. Treasury yields moved slightly lower along the curve, having risen sharply earlier in the week as investors braced for the possibility that the Federal Reserve could tighten monetary policy more aggressively to prevent inflation. [US/]
The yield on the benchmark 10-year Treasury note was last at 1.7737%, its lowest in a week, after hitting a two-year high of 1.902% on Wednesday.
Rising yields helped the dollar gain ground earlier in the week, even as it fell 0.08% on Friday against a basket of six major currencies.
However, the greenback fell against the safe-haven Japanese yen to a one-week low of 113.8 against the greenback, while the safe-haven Australian dollar was down 0.5%.
It rose 0.2 percent to $1,841.48 an ounce.