Asian stocks retreat as investors assess hawkish Fed; currencies trade mixed
Stocks in Indonesia and Singapore led
declines among emerging Asian equities on Tuesday, while
currencies in the region were mixed as cautious investors
digested hawkish comments from two U.S. Federal Reserve
The comments came ahead of Fed chair Jerome Powell’s speech,
due later today.
Equities in Indonesia fell as much as 1.8%, hitting
their lowest level since July 2022, while stocks in Singapore
slipped as much as 1.1%.
Analysts at OCBC said that hawkish rhetoric from Fed
officials Raphael Bostic and Mary Daly, who said they expect
rates to go somewhere over 5%, shook earlier market confidence
that the U.S. central bank was near a pivot point.
“While both officials are not voting members currently,
the de-risking could come from fears that Powell’s upcoming
speech could mirror the hawkish tone with some pushback as
well,” said Yeap Jun Rong, Market Analyst at IG.
In the Philippines, the country’s central bank chief
confirmed interest rates would likely need to rise a further 25
or 50 basis points at next month’s policy meeting, but added
that pressure to match Fed’s rate hikes was waning.
The peso rose for a fifth consecutive session,
adding as much as 0.2% to touch its highest level since June
2022, while the country recorded a better-than-expected trade
deficit of $3.7 billion for November.
“The PHP may enjoy some appreciation momentum in the near
term on the improving balance of trade,” analysts at ING wrote,
adding that a potential drop in exports later in the year could
spell some renewed depreciation pressure on the currency.
Other regional currencies were mixed even as the U.S.
dollar hovered near a seven-month low.
The Indian rupee added 0.2%, while the Singaporean
dollar, the Thai baht and the South Korean won
declined between 0.1% and 0.2%.
The Chinese yuan advanced for the fifth trading
day, hitting a new near five-month high, riding on reopening
IG’s Rong, however, added that the risk of virus waves after
the Chinese New Year period could be a catalyst for some
jitters, potentially prompting profit-taking activities among
Asian emerging assets in the near term.
Elsewhere, Brazil’s real last stood at 5.2546 per
dollar, having fallen more than 1% on Monday after supporters of
former President Jair Bolsonaro stormed the capital. It had yet
to trade as of Asia hours on Tuesday.
** Top losers on the Jakarta stock index include
Fuji Finance Indonesia Tbk PT and Geoprima Solusi Tbk
** Top losers on the Singapore STI include Jardine
Matheson and Frasers Logistics & Commercial Trust
** U.S. consumer price index (CPI) data due on Thursday
Asia stock indexes and currencies
at 0705 GMT
COUNTRY FX RIC FX FX INDE STOCKS STOCKS
DAILY % YTD % X DAILY YTD %
Japan -0.14 -0.73 <.n2>
India +0.22 +0.66 <.ns ei>
Indonesi -0.13 -0.13 <.jk a se>
Malaysia +0.02 +0.64 <.kl se>
Philippi +0.16 +1.51 <.ps nes i>
Singapor -0.11 +0.61 <.st e i>
Taiwan +0.25 +0.86 <.tw ii>
Thailand -0.22 +3.22 <.se ti>
(Reporting by Himanshi Akhand in Bengaluru)
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