By Kevin Buckland
TOKYO, Feb 10 (Reuters) - Asia-Pacific stocks retreated
on Friday, slumping toward a second weekly loss as investors
fretted about the potential for further Federal Reserve
tightening and the effect on the economy.
U.S. short-term Treasury yields held near a one-month high,
helping the dollar tick up against major peers, after Richmond
Fed President Thomas Barkin overnight added to a chorus of
hawkish central bank commentary in recent days.
MSCI's broadest index of Asia-Pacific shares sank 0.91% and was on course for a 1.36% weekly decline, after
losing 1.16% in the previous week.
Mainland Chinese blue chips lost 0.73% and the
Hang Seng tumbled 1.76%.
China's January factory gate prices fell more than economists
expected, suggesting that flashes of domestic demand that had
stoked consumer prices after the zero-COVID policy ended are not
yet strong enough to rekindle upstream sectors. Australia's benchmark slid 0.76% and South Korea's
Kospi shed 0.72%.
Japan's Nikkei bucked the trend with a 0.25% rise,
supported by some strong earnings reports.
U.S. equity futures slipped 0.12%, after the S&P 500
sank 0.88% overnight. German DAX futures pointed to a
0.9% decline at the restart, and U.K. FTSE futures signaled a 0.44% loss.
"Is inflation calming? That's really the core question for
this year," Barkin said in a podcast on the Richmond Fed's
website, adding that he felt the decline so far had been
"distorted" by some falling goods prices.
Investor focus is now trained on crucial U.S. consumer price
data due Tuesday.
"Where is the pain trade? I'd argue the market would be more
surprised by an upside surprise than a downside surprise" for
the U.S. inflation numbers, Chris Weston, head of research at
Pepperstone, wrote in a client note.
"Those not short risk in any great capacity (are) desperate
to see the vision of lower inflation take hold."
At the start of this week, investors had been cheered after
Fed Chair Jerome Powell refrained from striking a more hawkish
posture following after a much stronger than expected jobs
report at the end of last week.
"Powell maintained a relatively dovish tone, and markets
took that as a green light to rally, but pretty much 24 hours
later we got a stream of extremely hawkish Fed speak," said Tony
Sycamore, a strategist at IG.
"If rates go past that five, five-and-a-quarter percent
range that the Fed has previously indicated, markets are
definitely not priced for that - absolutely not."
Money markets currently see a peak in the current rate cycle
around 5.15% in July. The two-year Treasury yield eased slightly to
around 4.49% in Tokyo, after touching the highest since Jan. 6
at 4.514% overnight. The 10-year yield edged down to
around 3.67% after bumping around 3.96% mid-week, also the
highest since Jan. 6.
The U.S. dollar index , which measures the greenback
against six peers including the euro and yen, ticked up slightly
to 103.27, sticking to the middle of its range this week. It
touched 103.96 on Tuesday for the first time since Jan. 6 as
well.
Meanwhile, crude oil prices dipped on Friday but were headed
for a weekly gain with the market continuing to seesaw between
fears of a recession hitting the United States and hopes for
strong fuel demand recovery in China, the world's top oil
importer.
Brent crude futures declined 35 cents, or 0.4%, to
$84.15 a barrel, while U.S. West Texas Intermediate (WTI) crude futures slipped 41 cents, or 0.5%, to $77.65 a barrel.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates YTD Global asset performance Asian stock markets ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Kevin Buckland; Editing by Kim Coghill)
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.