An Asia stock gauge came off session highs on Tuesday amid a slide in Hong Kong and subdued sentiment due to the Federal Reserve’s signal of a sustained period of restrictive monetary policy to quell inflation. A retreat in China tech stocks put Hong Kong into the red in a mixed day for the region that included a jump in Japan. US futures fluctuated after Wall Street equities added to a slump that began Friday when Chair Jerome Powell stressed the Fed is willing to let the economy suffer to cool price pressures.
Why Does it Matter
Treasury yields and the dollar were little changed. Both have been pushed higher in the rethink sparked by Powell’s speech at Jackson Hole last week. Oil was near the highest since late July on potential Libyan production outages. Gold and Bitcoin wavered. In China, the central bank set a stronger-than-expected yuan fixing for a fifth day, a sign it doesn’t want an excessively weak currency. The move highlights how greenback strength is a challenge for Asia as the region’s currencies slip.
There’s “more pain ahead” for the yuan and a fall to 7 per US dollar looks likely, Divya Devesh, a foreign exchange strategist at Standard Chartered Plc, said on Bloomberg Television. In Europe, natural gas and power prices plunged after Germany said its stores of fossil fuel are filling up faster than planned. But Germany remains vulnerable in the winter if Russia halts gas flows. The European Union is preparing to step into its energy market to damp soaring power costs.