- Fed gets caught up in hawkish tone: analysts
- U.S. terminal rate expectations rise, dollar gains
- New swings hit China’s real estate stocks
SINGAPORE, Aug 24 (Reuters) – Asian stocks fell for an eighth straight session on Wednesday, with investors jittery about the scale of problems in China’s property sector and bracing for a message from the Federal Reserve at a symposium on This week’s Jackson Hole.
The broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 0.5%, while Japan’s Nikkei (.N225) fell by the same margin. The US dollar was just below all-time highs against most major currencies and near a 20-year high against the euro.
Wall Street had steadied on Tuesday after two days of heavy losses as soft U.S. data eased rate hike concerns, but S&P 500 futures were down 0.2% in Asia , while FTSE futures and European futures also fell slightly.
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Late Tuesday, Minneapolis Fed President Neel Kashkari was the latest official to reiterate the Fed’s focus on controlling inflation above all else, and traders are expecting something similar from the Fed president Fed Jerome Powell, speaking Friday from Wyoming.
“It might make more sense for (Powell) to come in with a plan: ‘Right now, all we care about is getting inflation down,'” said ING economist Rob Carnell.
“Bond yields would go up a bit more, having the desired effect … and then you can start to ease off (later).”
Traders have raised their expectations for where the Fed funds rate could peak, with current prices pointing to around 3.7% in mid-2023.
However, a recent spate of softer US economic news has seen short-term Treasury yields hold steady after rising throughout August.
US manufacturing and services surveys disappointed on Tuesday and July new home sales fell to a 6 1/2 year low. Read more
Two-year yields were flat at 3.307% on Wednesday and 10-year yields fell 2 basis points (bps) to 3.0332%.
CHINA SLIDE
The US dollar, which has been supported by higher interest rate expectations, has also benefited from the comparatively poor outlook elsewhere in the world.
In Europe, benchmark gas prices have tripled in just over two months, and a winter of unreliable energy supplies from Russia is looming.
Expected damage to growth and rising inflation causes the euro to languish. It bought $0.9956 on Wednesday after falling as low as $0.99005 on Tuesday.
Meanwhile, in China, property stocks fell as the gains brought another reminder of the deep hole in which developers find themselves without access to easy credit. An index of Hong Kong-listed builders ( .HSCIPC ) fell 2.5% to a 10-year low.
“People are still trying to understand the extent of the damaging effects as it has multiple repercussions,” said Samuel Siew, market specialist at CGS-CIMB in Singapore.
“It’s still very difficult to really gauge the full gravity of the situation. That’s what the markets are trying to decipher and whether the continued support is enough.”
The Hang Seng Index (.HSI) fell 1.3% on Wednesday, as did the Shanghai Composite (.SSEC), while the yuan fell sharply despite state media reports saying there is no base for a long-term decline.
Dollar strength elsewhere pushed the Aussie and Kiwi lower, although the yen rose slightly to 136.48 per dollar.
Brent crude futures fell below $100 a barrel (the contract was last down 43 cents to $99.79) amid some doubt over talk of Saudi supply cuts. U.S. crude futures fell 30 cents to $93.44 a barrel.
Spot gold was steady at $1,747 an ounce. Bitcoin still bears the scars of a sudden slide late last week and is parked at $21,490.
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Edited by Ana Nicolaci da Costa and Jamie Freed
Our standards: the Thomson Reuters Trust Principles.