Investors take profits after Monday’s rally
Asian markets turned negative on Tuesday, retracing recent gains as investors took profits on a rally sparked by hopes that the Federal Reserve’s rate-hiking cycle may be nearing an end.
Optimism was undermined by a spike in U.S. Treasury yields on Monday, which renewed concerns that the Fed could still raise rates further. Investors are also waiting for a number of Fed officials, including Fed Chairman Jerome Powell (Jerome Powell), to speak this week for clues about the central bank’s outlook.
Despite recent signs of slowing U.S. economic growth, some Fed officials remain cautious about declaring a victory over inflation. Minneapolis Fed President Neel Kashkari said Monday that the Fed needs to see more data to ensure inflation is under control.
Speaking to Fox News, Kashkari said, “Let’s just say that we need to keep getting data to see if we’ve really put the inflation genie back in the bottle.”
Markets are still betting on multiple rate cuts in the year, but the timing and magnitude of the cuts remain uncertain.
In Asia, stocks were mostly lower on Tuesday, with Hong Kong and Seoul leading the way. Stocks in Tokyo, Shanghai, Sydney, Singapore, Wellington and Jakarta also fell.
Stocks in Taipei and Manila bucked the trend, closing up 0.4% in Taipei and 0.2% in Manila.
We’re probably going to be in a trading range for the next month or so until there are clear signs of inflation, the actual impact of core inflation and what the Fed will do,” said Max Wasserman of Miramar Capital.
Investors eye U.S.-China meeting
Traders will also be watching this week’s meeting in San Francisco between U.S. Treasury Secretary Janet Yellen and Chinese Finance Minister He Lifeng. The meeting is seen as another step in the thawing of relations between the two superpowers.
The two-day meeting follows a one-on-one meeting between U.S. President Joe Biden and Chinese President Xi Jinping on the sidelines of the APEC summit later this month.
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