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SINGAPORE (Reuters) – Asian stocks fell from record highs on Tuesday as lingering concerns about potential obstacles to the Biden administration’s $ 1.9 trillion stimulus weighed on sentiment, dragging returns on US Treasuries at three-week lows.
Lower risk appetite supported the dollar against a basket of currencies, while oil prices edged down.
EUROSTOXX 50 futures fell 0.1% while FTSE futures added 0.03%, indicating a mixed opening for European stock markets. The S&P 500 ESc1 E-Mini futures lost 0.5%.
In a sea of red seen in the markets, South Korea and Hong Kong topped the losers and fell more than 2% each, Japan slipped 0.9% and Chinese stocks 1.6%. All of them hit landmark highs earlier this month.
“There have been a few warning bells from different parts of the world, as we’ve seen more lockdowns in Europe, the United States and Asia,” said Vasu Menon, senior investment strategist at OCBC Bank Wealth Management.
The largest MSCI index for Asia-Pacific stocks outside of Japan fell 1.5% to 717.3 but was not far from a record high on Monday and is still up 8% as high as now this year. The index was on track to record its biggest drop since late November.
“You need to see the delivery on the economic data front, on earnings and on enough vaccine being distributed,” Menon said, adding that uncertainty over the timing of the US stimulus package was hurting market sentiment.
The easing of tensions in the Taiwan Strait and the South China Sea also added to reasons for caution in Chinese markets, where a surge in small-cap short betting has also caught the attention of regulators.
A wave of money supply, very low or zero interest rates and the rollout of the COVID-19 vaccine have sparked a “buy everything” rally in recent months.
Some investors – signaling the surge in prices of assets like bitcoin or, on Monday, the surge in the stock price of video game retailer Gamestop – are starting to worry about markets entering bubble territory.
U.S. lawmakers have agreed that delivering COVID-19 vaccines to Americans should be a priority, even though they’ve locked down the size of a pandemic relief package.
The disagreements have meant months of indecision in a country suffering from more than 175,000 cases of COVID-19 a day with millions unemployed.
On Monday, the Nasdaq index hit a new high, but the Dow Jones Industrial Average slipped. [.N]
“We believe the profits may not be able to catch up with what people expect this year,” said Jacob Doo, chief investment officer of Envysion Wealth Management, citing lockdowns in Europe and the slow rollout of vaccines to United States.
“In the tech space, we’re cautious of FANGS now, just because there might be anti-trust laws that Biden would enforce,” Doo said.
The focus will also be shifted to the Federal Reserve’s Federal Open Market Committee meeting on Tuesday and Wednesday.
“We expect the January FOMC to repeat and reinforce the Fed’s existing bent, which is still important given recent reduction talks and other central bank considerations to adjust policy,” Ebrahim Rahbari said. , FX strategist at CitiFX.
The dollar rose to near a week high against a basket of currencies as volatility in equities dampened investor appetite for riskier currencies. The euro fell to $ 1.2127. [USD/]
Yields on benchmark 10-year US Treasuries slipped a fraction to fall to Monday’s three-week low, the last trade at 1.0381%. [US/]
Brent fell 0.7% to $ 55.50 a barrel, after rising nearly 1% on Monday. [O/R]
Reporting by Anshuman Daga; edited by Shri Navaratnam and Richard Pullin
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