Grind drops as Japan vacation tames high yields
- Asian stocks hovered amid a quiet session with Labor’s Thanksgiving Day in Japan.
- Powell’s re-appointment as Fed chairman is spurring concerns about rising rates and yields.
- American warships are sailing the Taiwan Strait again, the woes of covid are renewed in the west.
- Preliminary PMIs for November are expected ahead of Wednesday’s FOMC minutes.
Off in Japan joins a light schedule to offer a moody Asian session on Tuesday. Despite this, Asia-Pacific stocks remain under pressure amid firmer returns as Fed hawks applaud US President Joe Biden’s decision to appoint Jerome Powell for another term as president of the Federal Reserve (Fed) and Richard Clarida as Vice President.
That said, the MSCI Asia-Pacific Ex-Japan Equity Index is up 0.75% while 10-year US Treasury yields remain lackluster around 1.62% ahead of the European session.
Australia’s ASX 200 shows slight gains as Commonwealth Bank of Australia mixed PMIs joined comments from Marion Kohler, head of domestic markets at the Reserve Bank of Australia (RBA). Alternatively, New Zealand’s NZX 50 shows slight losses despite disappointing third-quarter retail sales amid strong bets on the Reserve Bank of New Zealand’s (RBNZ) rate hike in the decision to Wednesday’s monetary policy.
Elsewhere, fears of weaker economic growth from China and new covid woes from the West challenge bulls in Beijing stocks, which in turn are drowning stocks in South Korea, Indonesia, from India and Hong Kong. Fears of further clashes between the United States and China are also weighing on Asia-Pacific stocks as US warships once again sail through the sensitive Taiwan Strait on Tuesday.
On a broader front, firmer US Treasury yields are probing the bulls in equities ahead of early November PMI readings for the UK, Eurozone and US.
Looking ahead, worries about PMIs and the Fed’s rate hike could challenge stock markets, while talks about the resurgence of covid and stimulus measures from Japan, China and states – United can keep buyers optimistic.
Read: US 10-year yield jumps back above 1.60% as 2, 5, and 7-year yields all hit multi-month highs when Powell was re-appointed, poor bidding