GLOBAL MARKETS-Asia stocks suffer limited losses as US dollar, bonds buckle

Reuters
22 Apr
GLOBAL MARKETS-Asia stocks suffer limited losses as US dollar, bonds buckle

Asian stock markets : https://tmsnrt.rs/2zpUAr4

Nikkei losses limited in wake of latest Wall St slide

Dollar, Treasuries under threat as Trump scolds Powell

Earnings a hurdle as Tesla due to report

Gold hits fresh record, oil steadies after dive

Adds analyst comment, updates prices

By Wayne Cole

SYDNEY, April 22 (Reuters) - Asian stocks battled to hold ground on Tuesday after a furious flight from U.S. assets undermined Wall Street and the dollar, while concerns about the independence of the Federal Reserve piled fresh pressure on Treasuries.

Relatively limited losses in Asia did spark talk that funds could be reallocating money to equities in the area, though the impact of tariffs on economic growth remained a major drag.

President Donald Trump's increasingly vocal attacks on Fed Chair Jerome Powell for not cutting interest rates saw Wall Street indexes shed around 2.4% on Monday and the dollar hit three-year lows.

"The 'sell America' trade was in full flight," said Tapas Strickland, head of market economics at NAB.

"Whether or not President Trump is legally able and willing to move against the Fed, the jousting underscores the loss of U.S. exceptionalism and the very real policy risk for investors."

The selling did abate somewhat in Asia, allowing S&P 500 futures ESc1 to bounce 0.3% and Nasdaq futures NQc1 0.4%.

The market faces another test from earnings this week, with 27% of the S&P 500 due to report. Tesla TSLA.O is due later in the session, having already shed almost 6% on Monday amid reports of production delays.

Others out this week include Alphabet GOOGL.O and a host of high-profile industrials including Boeing BA.N, Northrop Grumman NOC.N, Lockheed Martin LMT.N and 3M MMM.N.

The fallout from Wall Street still only saw Japan's Nikkei .N225 ease a slim 0.2%, while MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS held steady.

Chinese blue chips .CSI300 added 0.2% as Beijing warned other countries against striking trade deals with the United States at China's expense.

European shares also saw restrained losses, with futures for the EUROSTOXX 50 STXEc1 and DAX FDXc1 down 0.5% and FTSE futures FFIc1 off 0.1%.

LOSING FAITH

Yields on U.S. 10-year notes US10YT=RR edged up further to 4.43% on fears the White House could try and replace Powell with someone more inclined to cut rates, even as inflation was being lifted by Trump's swingeing tariffs.

There was also the concern that the current Fed might now be more reluctant to ease policy in case that was perceived as giving into political pressure.

While White House talks on various trade deals are underway or about to start, a quick resolution seemed unlikely. Analysts at JPMorgan noted the average trade deal took 18 months to negotiate and 45 months to implement.

"We reiterate our view that if current policies do not change, then the probability of a U.S. recession in 2025 is 90%," they said in a note.

The loss of confidence in U.S. assets took a heavy toll on the dollar which touched its lowest since March 2022 against a basket of currencies at 97.923 =USD on Monday.

The currency hit a decade-low on the Swiss franc at 0.8042 CHF=EBS, while the euro EUR=EBS broke above $1.1500 to reach $1.1538. The dollar struck a seven-month trough on the yen at 139.92 JPY=EBS, and looked set to test a low form last September at 139.58.

"The independence of the Federal Reserve is a cornerstone of the dollar's credibility," noted Quasar Elizundia, a research strategist at broker Pepperstone.

"The dollar's status as the ultimate safe-haven asset can no longer be taken for granted; it is being actively challenged."

The weakness in the dollar combined with demand for physical safe havens helped gold to another record above $3,485 an ounce XAU=. GOL/

Oil prices have been going the other way as worries about a global slowdown met the prospect of increased supply from OPEC. O/R

There was a slight short-covering bounce on Tuesday as Brent LCOc1 rose 45 cents to $66.70 a barrel, while U.S. crude CLc1 added 65 cents to $63.73 per barrel.

Asia stock markets https://tmsnrt.rs/2zpUAr4

Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA

(Editing by Muralikumar Anantharaman and Saad Sayeed)

((Wayne.Cole@thomsonreuters.com; 612 9171 7144; Reuters Messaging: wayne.cole.thomsonreuters.com@reuters.net))

To read Reuters Markets and Finance news, click on  https://www.reuters.com/finance/markets For the state of play of Asian stock markets please click on: 0#.INDEXA 

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Most Discussed

  1. 1
     
     
     
     
  2. 2
     
     
     
     
  3. 3
     
     
     
     
  4. 4
     
     
     
     
  5. 5
     
     
     
     
  6. 6
     
     
     
     
  7. 7
     
     
     
     
  8. 8
     
     
     
     
  9. 9
     
     
     
     
  10. 10