Asia-Pacific markets mostly traded lower on Monday, as investors brace themselves for the next meeting of the U.S. Federal Reserve this coming week and watch for developments in Ukraine as tensions with Russia grow.
In South Korea, the KOSPI was down 1.45% while Hong Kong’s Hang Seng index fell 1.07%. Chinese mainland shares also slipped with the Shanghai composite 0.05% lower. In Australia, the ASX 200 fell 0.50%, and in Singapore, the FTSE Straits Times Index shed 0.40%. Japan’s Nikkei 225 rose 0.24% after retracing its earlier losses.
European markets are also expected to follow the Asian counterparts lower on Monday.
Oil prices rose on Monday on worries about supply disruption. Geopolitical tensions in Eastern Europe and the Middle East heightened concerns about an already tight supply outlook, while OPEC and its allies continued to struggle to raise their output.
The Brent now traded at $88.52 per barrel, and the U.S. crude futures traded at $85.72 per barrel. The benchmarks once again hovering at a seven-year peak touched last week.
Both U.S. crude and Brent rose for a fifth week in a row last week, gaining around 2% for the week, and up more than 10% this year.
The dollar firmed slightly on Monday with traders nervous about the much-watched Federal Reserve meeting this week. The dollar index, which measures the greenback against six major peers, was 0.156 higher on Monday, last stood at 95.790.
While Treasuries did bounce late last week, 10-year yields stood at 1.776% on Monday, still below a two-year high of 1.902% touched on Wednesday.
The onshore Chinese yuan traded at 6.3326 per dollar after the PBOC lifted the yuan midpoint fix to the strongest level since May 2018.PBOC set the midpoint at 6.3411 yuan per dollar, 0.13% stronger than the previous fix of 6.3492.
In cryptocurrency markets, Bitcoin traded around $35,000, hovering just above its lowest since July 2021. The world's largest cryptocurrency has nearly halved in value since its record peak of $69,000 hit November. Ether was at $2,440, having hit its lowest since July on Saturday.
Gold was little changed on Monday as investors awaited the U.S.S Fed meeting for confirmation of its interest rate hike path.
Spot gold was flat at $1,838.20 per ounce, and U.S. gold futures were up 0.3% at $1,838.40.
Spot silver shed 0.5% to $24.19 an ounce. Palladium was flat at $2,106.00 and platinum was slightly lower at $1,034.50.
shares fell on Monday in a sector-wide sell-off, as investors kept a cautious stance following a lower finish in Nasdaq amid fears of inflation and policy tightening by the U.S. Federal Reserve. Investors are keenly focused Fed meeting this week for more clarity on the U.S. central bank's plans to tighten monetary policy in the coming months.
The FOMC is due to meet on Tuesday and Wednesday to decide on the next steps for U.S. monetary policy. Markets are now even pricing in a small chance the Fed hikes rates this week, though the overwhelming expectation is for a first move to 0.25% in March and three more to 1.0% by year end.
Adding to the caution were concerns about a possible Russian attack on Ukraine with the U.S. State Department pulling out family members of its embassy staff in Kyiv. Tensions in Ukraine have been increasing for months after the Kremlin massed troops near its borders, which the West says is preparation for a war to prevent Ukraine from joining NATO.
Shares of China Evergrande Group jumped more than 13% on Monday, a day after the embattled developer said it would appoint an official from a unit of state asset manager China Cinda Asset Management to its board.
Data releases on Monday include U.K., U.S. and eurozone flash PMI figures for the services and manufacturing industry in January.