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Asian Stocks Down, as Concerns of Hawkish Fed Monetary Policy Mount -Breaking

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© Reuters.

By Gina Lee

Investing.com – Asia Pacific stocks were mostly down on Thursday morning. Investor sentiment was also affected by concerns that the central banks would become more hawkish when it comes to monetary policy, in order to reduce inflation and affect the recovery of COVID-19.

Japan’s fell 0.84% by 21:55 PM ET (2:55 AM GMT) and South Korea’s edged down 0.18%.

The Australian dollar edged up 0.3%

Hong Kong’s slid 1.46%.

China’s was down 0.39% and the fell 1.03%, with saying that it would sell its stake in HengTen Networks Group for $273 million.

U.S.-China relations were also in the spotlight, with Singaporean Prime Minister Lee Hsien Loong warning that tensions between the two countries over Taiwan could lead to a “mishap or miscalculation.” U.S. President Joe Biden also raised the need for conversations on nukes during his virtual summit meeting with Chinese counterpart Xi Jinping earlier in the week.

Treasuries stabilized, after finishing higher in the last session. An auction of 20 year notes finished below expectations.

According to data from the week before, U.S. inflation reached a 30-year record in October. The U.S. Federal Reserve is expected to increase interest rates and begin asset tapering faster than previously anticipated.

“With these most recent inflation readings, there is some concern that the Fed will reduce the amount of purchases, in other words, accelerate asset tapering. That would be a surprise to markets and could induce some volatility,” State Street Bloomberg: Michael Arone (NYSE:) Global Advisors Chief Investment Strategist.

Investors also await U.S. President Joe Biden’s decision on who will chair the Fed after incumbent Chairman Jerome Powell’s term expires in February 2022. Currently, Powell and Fed Governor Lael Mindard are in contention for the position.

Although both candidates hold similar opinions on monetary policy, Brainard is expected to be a bit more dovish, which means “longer-term rates would be lower for longer,” helping technology stocks, said Arone.

Investors are now awaiting comments by Richard Clarida, Fed Vice Chairman and Fed Bank of San Francisco President Mary Daly during the Asia Economic Policy Conference. This conference is scheduled to occur on Friday.

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