EQUITIES

Asia-Pacific stocks largely slipped in Tuesday trade. Nikkei 225 in Japan lead the losses regionally as it slipped 1.56%. The Shanghai composite shed early gains to trade 0.66% lower while over in Hong Kong, the Hang Seng index dropped 0.50%.

Elsewhere, South Korea’s KOSPI shed 1.08%, and the S&P/ASX 200 in Australia trading 0.55% lower.

Overnight on Wall Street, the Dow Jones Industrial Average shed 413.04 points to 34,308.08 while the S&P 500 slipped 1.69% to 4,412.53. The tech-heavy Nasdaq Composite lagged, dropping 2.18% to 13,411.96.

OIL

Oil prices climbed on Tuesday, reversing sharp losses from the prior day, as fears of a demand downturn in China eased after some of the strict restrictions were starting to relax across the country's financial capital. Market also weighed the potential for more sanctions on Russia's energy sector, while OPEC warned it would be impossible to increase output enough to offset lost supply, with some 7 million bpd of Russian oil and other liquids exports could be lost due to sanctions or voluntary actions.

Brent crude futures were up 090, to $100.24 a barrel, and U.S. West Texas Intermediate contracts were up 1% to $96.11 a barrel. Both contracts had settled 4% lower on Monday.

CURRENCIES

The dollar index was back above 100 on Tuesday morning, supported by high U.S. yields ahead of key inflation data, expected to show U.S. prices gained the most in over 16 years, reinforcing expectations of aggressive Fed tightening policy. The index last stood at 99.977.

The yield on benchmark 10-year notes rose to 2.830%, its highest since December 2018, compared with its U.S. close of 2.782% on Monday.

The yield on the 30-year Treasury bond rose to 2.86%, its highest since May 2019. The 2-year yield, which rises with traders' expectations of higher Fed fund rates, touched 2.5242% compared with a US close of 2.508%.

ECONOMIC OUTLOOK

Asian shares were down while the U.S. dollar held strong on Tuesday, as Treasury yields spiked to a three year high ahead of U.S. inflation data which could foreshadow even more aggressive interest rate hikes from the Federal Reserve.

Market-leading growth and technology stocks were shunned regionally amid mounting risks from soaring Treasury yields and hawkish commentary from the Fed.

Ongoing geopolitical strife helped prompt the flight to safety. Ukraine said it expects Russia to launch a huge new offensive soon in the eastern Donbas region, despite ongoing peace negotiations.

Extended lockdown in China had also weighed on investor sentiment, fanned worries that the latest development could slow down the global economic growth.

U.S. inflation data is expected to be out later Tuesday stateside, with the White House warning that it expects the report to show inflation that is “extraordinarily elevated.” Analysts expect the report will show an 8.5% YoY growth, the hottest reading since 1981. The U.S. Fed has vowed to aggressively tackle scorching inflation, and market participants largely expect a series of 50-basis-point interest rate hikes from the central bank in the coming months.

First-quarter earnings season bursts through the starting gate later this week, with big banks leading the way.