SINGAPORE (Reuters) – Asian equities fell on Tuesday to record highs as persistent concerns about potential blockages in the $ 1.9 trillion Biden stimulus boosted sentiment, bringing US Treasury yields to a high. minimum of three weeks.
The lower risk appetite provided some support to the dollar against a basket of currencies, while oil prices fell.
EUROSTOXX 50 futures fell 0.1%, while FTSE futures added 0.03%, indicating a mixed opening for European stock markets. E-Mini futures for the S&P 500 ESc1 fell 0.5%.
In a red sea seen in the markets, South Korea and Hong Kong outperformed losses and fell more than 2% each, Japan fell 0.9% and Chinese stocks lost 1.6% . All reached reference highs earlier this month.
“There have been a few warning bells from around the world as we have seen more blockages in Europe, the US and Asia,” said Vasu Menon, senior investment strategist at OCBC Bank Wealth Management.
The broader MSCI index of Asia-Pacific equities outside Japan fell 1.5% to 717.3, but was not far from a record on Monday and is still up 8% so far this year. The index was recording the biggest drop since the end of November.
“You have to see the delivery on the front of economic data, earnings and the distribution of a sufficient number of vaccines,” Menon said, adding that uncertainty about the timing of the US stimulus package is damaging market sentiment.
The stifling tensions in the Taiwan Strait and the South China Sea have also added to the cautionary reasons in Chinese markets, where a jump in short-cap bets has also caught the attention of regulators.
A mass flood of money, ultra-low or zero interest rates and COVID-19 vaccine launches have triggered a “buy it all” rally in the last few months.
Some investors – pointing to rising asset prices, such as bitcoin or, on Monday, the rising price of video game retailer Gamestop – are starting to worry that markets are entering the balloon territory.
US lawmakers have agreed that obtaining COVID-19 vaccines from Americans should be a priority, even if they have blocked horns over the size of a pandemic aid package.
The disagreements have meant months of indecision in a country that suffers from more than 175,000 COVID-19 cases a day, with millions of jobs.
On Monday, the Nasdaq index climbed a new high, but the Dow Jones Industrial Average fell. [.N]
“We suspect the gains may not be able to live up to what people expect this year,” said Jacob Doo, investment director at Envysion Wealth Management, noting blockages in Europe and the slow launch of vaccines in the United States.
“In the technology space, we are cautious about FANGS now, simply because there may be antitrust laws that Biden will implement,” Doo said.
The focus will also shift to the Federal Reserve Open Market Committee meeting on Tuesday and Wednesday.
“We expect the January FOMC to repeat and strengthen the Fed’s existing evidence, which is still significant, given recent conical discussions and the considerations of other central banks to adjust policy,” said Ebrahim Rahbari, FX strategist at CitiFX, in -a report.
The dollar advanced to a one-week high against a basket of currencies as stock volatility affected investors’ appetite for riskier currencies. The euro fell to $ 1.2127. [USD/]
The US Treasury’s 10-year benchmark yields fell a fraction to return to a three-week low of three months, with the latest trading at 1.0381%. [US/]
Crude oil fell 0.7 percent to $ 55.50 a barrel after rising nearly 1 percent on Monday. [O/R]
Reporting by Anshuman Daga; edited by Shri Navaratnam and Richard Pullin