In 2023, the U.S. Asian stocks extended losses for the week as investors digested feedback from the Federal Reserve’s plan rate hike. Treasury yields were high and the Green Pack was nearing a two-month high on Friday.
While the central bank press release did not show a clear end to pro-policy measures such as bond purchases, signs of a faster-than-expected rate hike indicate its concern about inflation as the U.S. economy recovers from the COVID-19 epidemic.
“What is most obvious is that inflation is starting to lurk from the genie bottle, which will be a major impetus for interest rates from the short to medium term,” said James McLeve, managing director of corporate equities at Argonaut in Perth.
Outside Japan, the broader index of MSCI Asia-Pacific shares fell 0.22%, dropping early gains and extending its decline to a fifth session.
Shares of Chinese Blue-Chip A lost 0.36% and shares of Taiwan lost 0.22%, while Hong Kong’s Hong Kong Sheng index was up 0.49% and Seoul Gospi was up 0.13%.
Japan’s Nikkei flat.
Gold prices rose following the central bank’s comments on Wednesday, but March 2020 is set to be the worst week since. Spot gold was up 0.57% at $ 1,783.45 an ounce.
The new U.S. Open on Thursday added signs of continued recovery in the world’s largest economy. The data showed the ease of factory operations and layoffs despite an unexpected rise in weekly unemployment claims.
Strong U.S. Confidence in the recovery boosted technology stocks on Thursday, with the Nasdaq stock up 0.87%. But concerns about inflation and higher rates weighed on the broader market, with the S&P 500 down 0.04%. The Dow Jones Industrial Average fell 0.62%.
“For a long time the central bank sent a strong signal that they were prioritizing the labor market, and they want this broad, all-out recovery and healing of the labor market, and they are going to drive the economy red-hot to get there,” said Richard Franulovich, head of FX strategy in the Westbank.
“Now … (inflation) is a high priority. So this is a big wake-up call for the markets. A big wake-up call.”
High expectations of inflation Raised treasury yields. The benchmark 10-year index gave 1.5141%, up from 1.511% on Thursday.
The 30-year bond last gained 2.0988%.
The dollar rose 0.09% to 91.958 against the two-month high of 92.010 on Thursday following a central bank meeting. The dollar was 110.19 against the yen and the euro was 0.08% softer at 1.1900.
Oil prices were hit by a strong dollar as demand and the new Iranian supply weighed.
The global benchmark Brent crude was down 0.99% at $ 72.36 a barrel after settling at its highest price since Wednesday, April 2019. U.S. West Texas Intermediate crude fell 0.86% to its highest level since Wednesday, October 2018. Was 70.43.