Asia stocks falter, NZ $ stumbles as RBNZ signals hikes over | Inquirer Business

Asia stocks falter, NZ $ stumbles as RBNZ signals hikes over

/ 11:52 AM May 24, 2023

TOKYO  – Asian stocks on Wednesday extended a global sell-off as U.S. debt ceiling negotiations dragged on without resolution, while the New Zealand dollar tumbled after the central bank caught markets off-guard by flagging that its tightening cycle is over.

The U.S. dollar – paradoxically – remained elevated amid safe-haven demand, which was also a driver of Treasuries and pushed yields lower.

Crude gained, though, as a warning from the Saudi energy minister to speculators raised the prospect of further OPEC+ output cuts.

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The New Zealand dollar was one of the major movers in the early Asian day. It dropped more than 1 percent after the Reserve Bank of New Zealand wrong-footed markets by signaling it’s done with its policy tightening cycle, after raising it by a quarter point. Market pricing had favored a half-point hike, and were also primed for an extension of the tightening streak.

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Japan’s Nikkei sank 1.1 percent, extending its retreat from a post-bubble-era peak to a second day.

Hong Kong’s Hang Seng declined 1.2 percent, and mainland blue chips slid 0.8 percent.

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MSCI’s broadest index of Asia-Pacific shares fell 0.7 percent.

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U.S. equity futures stabilized slightly after sharp declines for the main indexes S&P 500 and the Nasdaq overnight.

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Representatives of Presideznt Joe Biden and congressional Republicans ended another round of debt ceiling talks on Tuesday with no signs of progress, as the ostensible X-date of June 1 looms large.

Reports that Treasury has asked federal agencies whether they can delay upcoming payments added to the sense of crisis.

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“Payment prioritisation is now real,” Chris Weston, head of research at brokerage Pepperstone in Melbourne, wrote in a client note.

“And while it seems highly prudent to have this conversation, the markets anxiety levels has heated up consequently,” he said. “The market is starting to de-risk.”

The U.S. dollar index, which measures the currency against six major peers, was largely unchanged at 103.51, hovering close to a two-month high of 103.63 reached last week.

A small decline against fellow safe-haven the yen was largely offset by flat trading versus the euro.

The yen tends to have an inverse correlation to long-term Treasury yields, which ticked down to 3.682 percent in Tokyo.

In commodities, gold held steady at around $1,974 as traders eyed debt ceiling talks.

Crude advanced more than 1 percent, extending similar-sized gains from Tuesday, when Saudi Energy Minister Prince Abdulaziz bin Salman warned speculators to “watch out,” saying “they will be ouching.”

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Brent crude futures rose 86 cents, or 1.1 percent, to $77.70 a barrel, while U.S. West Texas Intermediate crude (WTI) gained 88 cents, or 1.2 percent, to $73.79 a barrel.

TAGS: Asian stocks, Global, selloff

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