Singapore, Dec 28 (BNA): Asian stocks fell on Wednesday, while the dollar held steady, as investors looked for direction after China took more steps toward reopening its coronavirus-hit economy.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.13%, snapping a two-day winning streak and looking to end the last month of the year in the red, Reuters reported.
Japan’s Nikkei opened 0.5% lower at the open, while Australia’s S&P/ASX 200 lost 0.43%.
Chinese stocks are set to open slightly lower, while Hong Kong stocks open up 1%, encouraged by China’s announcement on Monday that it will stop requiring incoming travelers to enter quarantine from January 8.
The faster-than-expected rate of infection has fueled expectations that a rapid economic recovery is imminent.
Wall Street closed lower overnight as US Treasury yields weighed on interest rate sensitive growth stocks.
Investors have been trying to gauge how much higher the Federal Reserve will need to raise interest rates as it tightens policy in its ongoing fight against inflation while also trying to avoid tipping the economy into recession.
The yield on the 10-year Treasury fell 0.9 basis points at 3.849%, hovering around the five-week high of 3.862% touched in the previous session.
The yield on the 30-year Treasury note fell 2.3 basis points at 3.920%, while the two-year US Treasury yield, which usually moves in accordance with interest rate expectations, fell 1.9 basis points at 4.349%.
Meanwhile, policymakers at the Bank of Japan discussed the growing prospects that higher wages could finally eliminate the risk of a return to deflation, a summary of views at their December meeting showed on Wednesday.
At the December 19-20 meeting, the Bank of Japan maintained its ultra-easy policy, but surprised the markets with an adjustment to its yield control policy, allowing long-term interest rates to rise further.
While markets have growing expectations that the Bank of Japan is likely to change its policy, investors are likely to focus on who will lead the Bank of Japan when Governor Haruhiko Kuroda steps down in April.
“We believe that once the new governor is appointed, a policy review will follow in the second quarter of 2023,” said Min Joo Kang, an economist at ING. It said another adjustment in the yield curve control policy was possible in the first half of 2023, and ING expected a rate hike in late 2023 or early 2024.
“The salary negotiations in the spring of next year are the most important to witness a more serious change in the Bank of Japan’s policy.”
In the currency market, the Japanese yen fell 0.25% against the dollar at 133.80 per dollar, with the euro falling 0.08% to 1.063 dollars.
The dollar index, which measures the greenback as a safe haven against six major currencies, rose 0.077%.
US crude rose 0.29% to $79.76 a barrel and Brent crude at $84.64, up 0.37% on the day.
SM