Asian Stock Market: On the back foot as US Treasury yields keep Fed-led strength

The Fed finally played its ball and accepted the reflation fears during Wednesday’s monetary policy meeting. Market reaction following the event matched expectations of a surge in the US Treasury yields and the US dollar index (DXY). However, chatters over the stimulus and mixed comments from the Fed Chair Jerome Powell limited the equity markets’ losses, be it in the US or Asia.

Also adding to the momentum could be the welcome economics from Australia and New Zealand, as well as comments from China suggesting no more pains for commodity traders.

Against this backdrop, MSCI’s index of Asia-Pacific shares outside Japan drops 0.30% whereas Japan’s Nikkei 225 marks 1.03% intraday losses to 28,990 by the press time of the pre-European session on Thursday.

Australia’s ASX 200 and New Zealand’s NZX 50 were a bit reserved on the downside as Aussie employment and Kiwi Q1 GDP portrayed an upbeat scenario for Pacific majors. Further, stocks in China buck the trend with mild gains amid optimism that there won’t be more restrictive measures for trading as the government achieved targets on commodity price control.

Elsewhere, South Korea’s KOSPI and India’s BSE Sensex are down below 0.50% on a day while Indonesia’s IDX Composite drops around 0.75% ahead of the Bank Indonesia (BI) meeting.

Further, the US 10-year Treasury yields trim the heaviest jump since March, marked the previous day around 1.57% whereas S&P 500 Futures extend Wall Street’s mild losses forward, down 0.35% by the press time.

As the Fed backed market fears, investors may seek further clues of easy money restrictions to curtail trading. However, a lack of major catalysts during the week may limit the market moves going forward.

Also read: Wall Street Close: FOMC, Jerome Powell weigh on the equity benchmarks