Kanupriya Kapoor

SINGAPORE, (Reuters) – Asian equity markets struggled to find a footing Friday. The bounce in U.S. futures was supported by Amazon, however traders were concerned about the possibility that global inflationary pressures will be resisted.

The MSCI Asia-Pacific share index outside Japan, which is the broadest in MSCI’s portfolio, climbed 0.4% on its first trading day following this week’s Lunar New Year holiday. The index fell by 0.4%.

Overnight, the euro experienced its highest jump in over a year. This was after Christine Lagarde, President of the European Central Bank (ECB), left the door open for rate rises and stated that inflation had been running higher longer than expected.

While the Bank of England increased rates by 0.5%, nearly half of its policymakers desired a larger increase. This was the most severe day since almost a whole year. [.N]

Rob Carnell from ING Singapore, chief economist, stated that “the environment is changing” in the way central banks stances. While they were initially positioned in growth-supportive areas, now they are shifting to combat inflation.

This follows a Federal Reserve shift to hawkish rhetoric in recent months. It has used the blowtorch on bonds and growth stocks, leaving Meta Platforms (NASDAQ:) owners little to lose.

Meta fell more than 26% in Thursday’s trading, making it the worst single-day drop in U.S. stock market value. The Nasdaq fell 3.7% on Thursday, marking its worst day for 17 months.

Amazon (NASDAQ: ) posted better-than expected earnings following the bell. The share rose 17% after hours trade, driving up 1.7% of the market and improving sentiment in Asia.

Following strong quarterly reports and extended trading, Snap’s shares and Pinterest’s share prices soared. Twitter also jumped after the report, reversing earlier losses.

YIELDS JUMP

The backdrop of rising rates is still evident. Analysts believe this will not change, even if U.S. Labour data are weaker than economists anticipate.

After the ECB’s hawkish turning, European yields jumped overnight to 0.155%. The yield on benchmark rose 12 basis points (bps), and is now at a three-year peak of 0.155%.

The yields on two-year bonds rose 14 bps, to -0.322%. This is well over the ECB policy rate of -10.50%. Britain is betting on BoE hikes and the yields of two-year gilts have risen more than 10 basis points to an 11 year high of 1.169%. [GB/]

As investors braced for Japan’s Bank of Japan, they urged the Bank of Japan not to follow their lead and to tighten policies. Even Japanese government bonds anchored to Japan reached 6-year highs Friday.

Treasuries sold overnight, and were stable in Asia with the yields at 1.2179% (two-year) and at 1.814% (10 year). [US/]

Currency markets: The euro’s rally lifted it to $1.1451 for a three-week peak. It is now facing its worst week since nearly two years, with more than 2% of the previous week. [FRX/]

Trade-linked currencies have been kept under control by a risk-averse attitude. The Australian dollar last stood at $0.7140, while the 0.6673 was at 0.6673.

Traded at $90/barrel for the first time in 2016 after a spike of 0.45%. [O/R]