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Asian stocks tense for Fed tapering news By Reuters


© Reuters. FILEPHOTO: An individual looks at the board that shows stock prices in Tokyo (Japan), January 6, 2020. REUTERS/Kim Kyung-Hoon

By Wayne Cole

SYDNEY (Reuters) – Asian shares eased and the dollar held firm on Monday ahead of a week graced with no less than a dozen central bank meetings, highlighted by the Federal Reserve which is likely to take another step toward tapering.

The week was dominated by holidays in Japan, South Korea, China, and South Korea. Political uncertainty is added with the Canadian and German elections.

With a Thursday bond interest payment, the fate of Evergrande, a Chinese property company with liabilities totalling $300 billion, remains in doubt.

China’s economy continues to be a concern, and Beijing’s crackdown against tech firms is continuing to plague the region. Stocks in Hong Kong were particularly affected last week.

MSCI’s Asia-Pacific share index outside Japan fell another 0.2% on Monday after losing 2.5% the week before.

The market was closed and may need to consolidate after a surge of 30 years ago on hope that the new Prime Minister will provide more support and make policy changes.

Nasdaq futures eased 0.1% and unchanged, with Wall Street ending last week on a soft note after disappointing U.S. consumer confidence data.

Although the Fed will likely continue to prepare for tapering during its policy meeting Tuesday and Wednesday on Tuesday, the consensus is that an announcement should be made at the November or December meetings.

Two-month high yields in 10-year Treasuries reached their highest point, and the curve flattened before the meeting.[US/]

Tapas Sterickland from NAB, who is director of economics, cautioned that the yield curve was flatter “indicative of some fears that the Fed might overdo its eventual hiking cycles.”

Given that seven out of 18 FOMC members had predicted a hike next year, he noted that only two to three FOMC members would have to adjust their “dotplot” forecasts to move it to the median.

“The Fed will also be publishing dots for 2024 that will show the intensity of the potential hiking cycles.”

Market consensus calls for four hikes in 2023, and two in 2024. The longer-term fed funds rate is expected to be 2.125%.

Meetings are scheduled for central banks across the EU and in Japan, UK. Switzerland. Sweden. Norway. Indonesia. The Philippines. South Africa. Turkey.

Expect the Norges Bank to become the first G10 bank to raise interest rates.

A combination of increased U.S. yields, combined with general risk-aversion has helped the dollar rise to a near one month high at 93.232 for a basket currency.

At 109.96 it was within a range, and at $1.1728 the euro was just below its three-week low. The reason for this was uncertainty in Germany ahead of the weekend’s elections.

Canada will go to the polls Monday, with the race still too close.

A stronger dollar meant that gold was valued at $1.753 an ounce, after losing 1.9% in the previous week.

The U.S. Gulf of Mexico saw oil prices fall as companies producing in that region resumed operations after two consecutive hurricanes. [O/R]

fell 21 cents to $75.13 a barrel, while lost 24 cents to $71.73.