Asian stocks fall as Fed tightening doubts rise

The benchmark index of Asian stocks is set to end a four-game winning streak as major stock indexes move lower. South Korea’s Kospi index fell more than 2,020 percent after its biggest gain in three years on Monday, after it renewed a ban on short selling. European and U.S. stock contracts slipped.

Jun Rong Yeap, a market analyst at IG Asia Pte. said, „Following yesterday’s strong rally across the region, equity indices gave back some of their gains as bond yields rallied and the dollar strengthened.“

Traders are now predicting that the Fed will lean against the recent easing of financial conditions, saying it will remain open on policy. Minneapolis Fed President Neel Kashkari said it was too early to declare a victory over inflation, despite positive signs that price pressures are easing, and many Fed officials, including Chairman Jerome Powell, will speak in the coming days.

Fed officials‘ speeches fuel doubts about end of tightening

Federal Reserve officials spoke on Monday intensified doubts about the end of tightening policy. Kashkari said that while inflation is cooling, the Fed will maintain an „aggressive“ monetary policy stance to ensure inflation returns to its 2% target. Powell is due to speak on Wednesday and he is likely to elaborate further on the Fed’s policy path.

Bond yields rise

U.S. Treasury yields rose sharply on Monday, reflecting investor concerns about an end to Fed tightening. the 10-year Treasury yield rose <> basis points to 2.5 percent.

Dollar strengthens

The dollar strengthened against all major currencies as investors sought safe-haven assets. The dollar rose <> percent to 1.08 against the euro.

Australian dollar falls

The Australian dollar and Australian stocks extended losses after the Reserve Bank of Australia announced a 25 basis point increase in its benchmark interest rate. The RBA said it expects inflation to remain high in the coming months, requiring further policy tightening.

China’s exports fall

China reported that exports fell more than expected to 1.3% in October. This indicates a continued slowdown in global trade, putting pressure on China’s economic recovery.

Lower oil prices

Oil prices weakened as the uncertain demand outlook and fresh doubts about the Federal Reserve’s end of tightening outweighed expectations of extended production cuts by Saudi Arabia and Russia.