EQUITIES
Shares in Asia-Pacific fell for a second day on Thursday as investors reacted to Fed guidance on tightening monetary policy.
The Nikkei 225 in Japan led the losses regionally as it fell 1.70%. Mainland Chinese stocks declined, with the Shanghai composite was down 0.99%, and the Hong Kong’s Hang Seng index slipped 1.31%.
In South Korea, the KOSPI dipped 1.22%, the S&P/ASX 200 in Australia declined 0.60%, and in Southeast Asia, Singapore’s Straits Times index slipped 0.55%.
Overnight in Wall Street, the Dow Jones Industrial Average slipped 0.42%, to 34,496.51. The S&P 500 fell 0.97% to 4,481.15, and the Nasdaq Composite dropped another 2.22% to 13,888.82 after falling about 2.3% on Tuesday.
OIL
Oil prices clawed back some losses on Thursday after fell sharply in the previous session on IEA announcement for a huge release of oil from emergency reserves to offset supply lost from Russia. The action however seen as near-term solution band-aid, with supply expected to remain tight.
Brent crude futures climbed 0.9%, to $102.60 a barrel, while U.S. WTI crude futures rose 0.5%, to $97.48 a barrel.
The benchmarks slipped more than 5% to a three-week low overnight after member states of the International Energy Agency (IEA) announced to release 120 million barrels from strategic reserves, bolstering the 180-million-barrel release of crude reserves already announced by President Joe Biden last week.
CURRENCIES
In currency markets, the prospect of quantitative tightening in the U.S. kept the dollar nearly two-year peak against a basket of currencies. It was last up at 99.539.
The yield on 10-year Treasury notes was little changed on Thursday at 2.570% while the 2-year note yield was slightly softer at 2.4511%, leaving this closely watched part of the yield curve slightly steeper after starting the week inverted.
GOLD
Gold eased on Thursday as hawkish Fed boosted the dollar and Treasury yields, denting the safe-haven metal's appeal.
Spot gold was down 0.23% at $1,920.80 per ounce, and U.S. gold futures was flat at $1,924.30.
ECONOMIC OUTLOOK
Shares retreated on Thursday in line with a global selloff, after the Federal Reserve released minutes from its last meeting that reinforced views the central bank may tighten aggressively to curb inflation.
Tech and growth shares continue to decline today, with higher rates seen as a negative for growth stocks. The tech-heavy Nasdaq logged a decline of over 2% for a second straight day.
Indexes already had been down sharply ahead of the minutes' release, building on declines from a day earlier when Fed Governor Lael Brainard's comments raised concerns about more aggressive Fed action to fight inflation.
According to minutes of the March 15-16 policy meeting, Fed officials "generally agreed" to cut up to $95 billion a month from the central bank's asset holdings as another tool in the fight against surging inflation, even as the war in Ukraine tempered the first U.S. interest rate increase. In March, the Fed raised rates for the first time since 2018 and pivoted away from an easy monetary policy during the coronavirus pandemic.
The European Central Bank will publish its equivalent minutes later today. Though the minutes from the ECB March meeting are unlikely to include such hawkish plans, investors will expect insight into policymakers' delicate balancing act to manage soaring inflation and slowing growth.
The U.S. continue to impose more sanctions on Russia on Wednesday, as Russian forces bombarded cities in Ukraine.
Investor also remain cautious on the growing economic strains in China, which is grappling with new outbreaks of COVID-19. Shanghai, currently under a city-wide lockdown, reported nearly 20,000 new cases on April 6 - the vast majority asymptomatic - the local government said on Thursday. A total of 23 Chinese cities have implemented either full or partial lockdowns, which collectively are home to an estimated 193 million people and contribute 22% of the country's GDP.
