Asia shares tense as Fed looms, Ukraine a concern
* Asian stock markets : Link
* Nikkei off 1%, Wall St futures try to bounce
* Fed expected to sound hawkish on March rate hike
* Markets wary of possible Russian attack on Ukraine
* Dollar generally firm, oil edging higher again
By Wayne Cole
SYDNEY, Jan 24 (Reuters) - Asian share markets slipped on Monday with the Federal Reserve expected to confirm it will soon start draining the massive liquidity that has fuelled the huge gains in growth stocks in recent years.
Adding to the caution was concerns about a possible Russian attack on Ukraine with the U.S. State Department pulling out family members of its embassy staff in Kyiv.
The New York Times reported President Joe Biden was considering sending thousands of U.S. troops to NATO allies in Europe along with warships and aircraft.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS eased 0.1% and Japan's Nikkei .N225 1.0%. However, Wall Street futures were trying to bounce after last week's drubbing, with the S&P 500 futures ESc1 up 0.4% and Nasdaq futures NQc1 0.7%.
Edgy markets are now even pricing in a small chance the Fed hikes rates this week, though the overwhelming expectation is for a first move to 0.25% in March and three more to 1.0% by year end. FEDWATCH
"With inflation eye-wateringly high, the Fed is on course to steadily remove the ultra-accommodative monetary policy that has been a key prop to stock prices for over a decade now," said Oliver Allen, a market economist at Capital Economics.
The prospect of higher borrowing costs and more attractive bond yields took a toll on tech stocks with their lofty valuations, leaving the Nasdaq down 12% so far this year and the S&P 500 nearly 8%.
The rout was exacerbated by a slide in Netflix NFLX.O , which tumbled almost 22%, shedding $44 billion in market value.
Such was the scale of the losses that Treasuries actually rallied late last week on speculation the bonfire of market wealth might scare the Fed into being less hawkish, a variation of the old Greenspan put.
However, Allen noted that even with the recent drop the S&P 500 was still 40% above where it ended 2019, and the Nasdaq 60%.
"Investors may not be able to rely on a so-called 'Fed put' this time around, given that the central bank's tightening cycle has not even begun, and that the strength of the U.S. economy suggests that much tighter policy is warranted."
Indeed, the first reading of U.S. gross domestic product for the December quarter is due this week and forecast to show growth running at an annualised 5.4% before Omicron put its foot on the brakes.
Earnings season is also well under way and companies reporting this week include IBM IBM , Microsoft MSFT.O , Johnson & Johnson JNJ , Intel INTC.O , Tesla TSLA.O , Apple AAPL.O and Caterpillar CAT .
While Treasuries did bounce late last week, 10-year yields are still up 22 basis points on the month so far at 1.77% US10YT=RR and not far from levels last seen in early 2020.
That rise has generally supported the U.S. dollar, which added 0.5% on a basket of currencies last week and last stood at 85.647 =USD . The euro was stuck at $1.1341 EUR= , having failed to sustain a recent rally to near $1.1500. "The risk is the Fed's statement portrays an urgency to act soon, likely in March, in the face of very high inflation," said Joseph Capurso, CBA's head of international economics.
"That could even encourage markets to price a risk of a 50 basis point rate hike in March and, under that scenario, we expect a knee-jerk reaction above its 4 January high of 96.46."
The Japanese yen tends to benefit from safe haven flows as stocks crumble, keeping the dollar soft at 113.66 JPY= and uncomfortably close to last week's low of 113.47.
Gold held up at $1,833 an ounce XAU= , having hit a six-week peak of $1,842 last week.
Oil prices were rising again having climbed for five weeks in a row to a seven-year peak on expectations demand will stay strong and supplies limited.
Brent LCOc1 added 74 cents to $88.64 a barrel, while U.S. crude CLc1 rose 70 cents to $85.84.
Asia stock markets Link
Asia-Pacific valuations Link
Reporting by Wayne Cole; Editing by Sam Holmes
Mga Kaugnay na Asset
Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.
Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.
Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.