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Asian Stocks Down, Investors Brace for Central Bank Monetary Policy Tightening -Breaking

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© Reuters.

By Gina Lee

Investing.com – Asia Pacific stocks were mostly down on Tuesday morning, with U.S. equity futures showing modest gains and sovereign bonds retreating. Investors keep imagining that central banks will tighten monetary policies to combat high inflation.

South Korea’s was up 0.44% by 10:41 PM ET (2:41 AM GMT). The Bank of Korea published the data earlier that day.

The Australian dollar fell 0.17% with the Bank of Australia making its decision late in the afternoon. Widely expected, the central bank will increase its interest rate for the first-time since 2010.

Hong Kong’s was down 0.38%. Markets surged up to 4% earlier in the session after re-opening from Monday’s holiday. Japanese and Chinese markets remain closed due to holiday.

U.S. equity shares rose to an even higher closing on Monday after a hard April for global markets.

U.S. Treasuries dropped Monday with the benchmark 10 year yield falling to 3% and the real benchmark yield rising above zero. Due to the Japanese holiday, there is no cash trading in Asia.

Investors now await the U.S. Federal Reserve’s , due to be handed down on Wednesday, where the central bank is expected to unveil the biggest interest-rate hike since 2000. Other central banks throughout the week will be able to announce their policies, including on Thursday.

We will see if these policies can improve financial conditions while avoiding an economic recession. Investors were cautiously optimistic in the past, but it hasn’t lasted very long since 2022.

“Our view remains that the right strategy right now is to position for inflation, a clear and present fact, rather than recession, which is still only a possibility,” UBS Global Wealth Management chief investment officer for the Americas Solita Marcelli said in a note.

The U.S. will release additional data during the week. This includes later in day, Friday’s April 2022 jobs report and Friday’s U.S. GDP.

China is continuing to confront its challenges in Asia Pacific. They continue to impede economic growth as well as global supply chains.

Authorities also vowed to support ‘platform firms’, with investors betting on a softer regulatory stance toward these technology companies. However, the government could reportedly still seek a 1% stake in the nation’s biggest tech firms as well as a direct role in corporate decisions.

Oil hovered around the $105 mark at one point. Investors continue to weigh the risks from the ongoing war in Ukraine, precipitated by Russia’s invasion on Feb. 24, and fuel demand concerns in China.

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