Asia Morning Call-Global Markets

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Jan 28 (Reuters) - ----------------------------------------------------------------------------------------

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** indicates closing price

All prices as of 18:08 GMT

EQUITIES

GLOBAL - U.S. stocks painted a mixed picture Thursday as investors digested how strong economic news could inform the Federal Reserve's thinking on interest rate hikes, while the dollar hit its highest level in over a year.

The Dow Jones Industrial Average (.DJI) was up 0.12%. The MSCI world equity index (.MIWD00000PUS), which tracks shares in 45 countries, was down 0.48%.

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NEW YORK - The S&P 500 and the Nasdaq erased their gains in afternoon trading on Thursday, dragged down by a sharp fall in Tesla shares after the electric carmaker warned supply chain issues would last through the rest of the year.

At 12:54 p.m. ET, the Dow Jones Industrial Average (.DJI) was up 88.96 points, or 0.26%, at 34,257.05, the S&P 500 (.SPX) was down 1.09 points, or 0.03%, at 4,348.84, and the Nasdaq Composite (.IXIC) was down 62.90 points, or 0.46%, at 13,479.22.

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LONDON - European shares shrugged off a weak start to the session to end higher on Thursday after the U.S. Federal Reserve signalled a March interest rate hike, with defensive sectors including healthcare and utilities leading the gains.

The pan-European STOXX 600 (.STOXX) rose 0.7%, with most major regional markets reversing course to end the day higher.

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TOKYO - Japan's Nikkei index ended at a 14-month low, dragged down by technology heavyweights, after the U.S. Federal Reserve's chairman signalled plans to steadily tighten policy.

The Nikkei share average (.N225) lost 3.11% to 26,170, its lowest close since Nov. 24, 2020. The index, which fell for a third straight day, marked its biggest daily decline since June 21, 2021.

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SHANGHAI - Chinese shares slumped to nearly 16-month lows and the yuan fell the most in seven months against the dollar on Thursday, as global investors worried that the U.S. Federal Reserve would move aggressively to curb inflation.

China's CSI 300 blue-chip share index (.CSI300) closed down nearly 2% to its lowest level since Sept. 30, 2020, and the Shanghai Composite index (.SSEC) ended 1.8% lower.

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AUSTRALIA - Australian shares fell into correction territory on Thursday, driven by tech and gold stocks after the U.S. Federal Reserve signalled interest rate hikes as early as March, with investors now looking to next week's Reserve Bank of Australia meeting.

The benchmark S&P/ASX 200 index (.AXJO) closed lower for a fourth straight day, down 1.8% at 6,838.3 - its lowest since April last year. The index is now more than 10% below its August 2021 high and is on track for its worst month since March 2020.

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SEOUL - South Korean shares logged their sharpest drop in almost a year and a half on Thursday as investors fret over the Federal Reserve's plan to combat inflation with higher interest rates starting as early as March, while some sold LG Energy Solution shares at the trading debut.

The benchmark KOSPI (.KS11) fell 94.75 points, or 3.50%, to 2,614.49 as of 06:33 GMT, the sharpest drop since Aug. 20, 2020.

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FOREIGN EXCHANGE

NEW YORK - The dollar soared to its highest levels since July 2020 against other major currencies on Thursday, powered by bets the U.S. Federal Reserve could deliver faster and larger interest rate hikes in the months ahead.

The dollar index , which measures the greenback's value against other major currencies, rose to 97.299, the highest since July 2020.

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SHANGHAI - China's currency weakened sharply on Thursday, logging its biggest one-day loss against the dollar since June 17, 2021 as higher U.S. yields lifted the greenback.

The yuan fell roughly 0.7% against the dollar at the end of domestic trading session, after the People's Bank of China set a sharply weaker midpoint rate CNY=PBOC at 6.3382 yuan per dollar, versus 6.3246 a day earlier.

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AUSTRALIA - The Australian and New Zealand dollars fell on Thursday as markets rushed to price in ever more U.S. rate hikes, battering bonds and sending short-term yields to their highest in almost three years.

The Aussie was stuck at $0.7094 , having shed 0.5% overnight to test the recent two-month trough of $0.7090. Strong resistance stands around $0.7180, while support lies at $0.7083 and the December low of $0.6994.

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SEOUL - The Korean won weakened on Thursday, while the benchmark bond yield rose.

The won was quoted at 1,202.8 per dollar on the onshore settlement platform , 0.42% lower than its previous close at 1,197.7.

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TREASURIES

NEW YORK - U.S. yields on the shorter end of the curve soared on Thursday after Federal Reserve Chairman Jerome Powell flagged multiple interest rate increases this year, citing the economy's strong labor market and persistently high inflation.

The U.S. 2-year yield, which reflects interest rate expectations, surged to 1.208% , a nearly two-year peak.

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LONDON - Euro zone bond yields rose on Thursday as bets grew on a more hawkish U.S. Federal Reserve, while Italian bonds outperformed as the country's main political blocs showed willingness to solve the impasse in the ongoing presidential election.

Euro zone bond yields rose on the news and Germany's 10-year yield, the benchmark for the bloc, was up 1.4 basis points at 1623 GMT to -0.058% after rising as much as 4 bps in earlier trading.

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TOKYO - Japan's two- and five-year government bond yields rose to their highest in six years on Thursday, after U.S. Federal Reserve signalled an interest rate increase in March.

The two-year JGB yield jumped 1.5 basis points (bps) to minus 0.055%, and the five-year yield gained 1.5 bps to minus 0.010%, their highest since Jan. 29, 2016, when the Bank of Japan introduced the negative interest rates.

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COMMODITIES

GOLD - Gold prices slid 1% to a more than two-week low on Thursday, as the dollar rallied after robust U.S. economic data strengthened the case for interest rate hikes by the Federal Reserve in March.

Spot gold declined 1.1% to $1,798.00 an ounce by 10:32 a.m. ET (1532 GMT), having hit a low of $1,794.80 earlier. U.S. gold futures dropped 1.4% to $1,803.30.

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IRON ORE - Dalian iron ore prices rose on Thursday on hopes of robust demand for the steelmaking ingredient in China when steel production curbs are eased after next month's Beijing Winter Olympics.

The most-traded May iron ore contract on China's Dalian Commodity Exchange rose as much as 2% to 781 yuan ($123.07) a tonne, its highest since Oct. 13, before ending daytime trading 0.5% higher at 769 yuan.

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BASE METALS - Copper prices eased on Thursday as the U.S. Federal Reserve indicated it could tighten monetary policy faster than previously expected, boosting the dollar.

Three-month copper on the London Metal Exchange was down 1.4% at $9,770 a tonne by 1700 GMT, snapping a two-session winning streak.

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OIL - Oil prices steadied on Thursday, after Brent crude earlier hit a seven-year high above $90 a barrel, as the market continued to balance concerns about tight worldwide supply with expectations that the U.S. Federal Reserve will soon tighten monetary policy.

Global benchmark Brent rose 15 cents to $90.11 a barrel by 11:40 a.m. EST (1640 GMT), while U.S. crude futures gained 18 cents to $87.53 in a volatile session with both contracts see-sawing between positive and negative territory.

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PALM OIL - Malaysian palm oil futures extended gains to a third session on Thursday, as top producer Indonesia imposed mandatory domestic sales and high energy rates boosted prices of the vegetable oil.

The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange gained 2.10% to 5,441 ringgit ($1,297.02) per tonne by closing time.

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RUBBER - Japanese rubber futures slid on Thursday, as investors took profits ahead of the Lunar New Year holiday in top buyer China, while concerns that the U.S. interest rate hike may slow a recovery in the global economy also weighed.

The Osaka Exchange rubber contract for July delivery , finished 2.5 yen, or 1.0%, lower at 236.5 yen ($2.1) per kg.

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