Asian Stocks Down as Investors Digest Powell’s Renomination as Fed Chair By

Asian Stocks Down as Investors Digest Powell’s Renomination as Fed Chair
© Reuters.

By Gina Lee – Asia Pacific stocks were mostly down on Tuesday morning, with continuing to fuel bets on quicker monetary policy tightening.

South Korea’s was down 0.54% by 9:16 PM ET (2:16 AM GMT), with the handing down its policy decision on Thursday.

In Australia, the rose 0.66%, and across the Tasman Sea, the hands down its policy decision on Wednesday.

Hong Kong’s fell 1.02%.

China’s was up 0.24% while the was down 0.23%. Investors are also keeping an eye on China’s outlook over concerns that the slowdown in the country’s economic recovery from COVID-19 could test the policy mettle of the People’s Bank of China.

Japanese markets were closed for a holiday and there will be no Cash Treasuries trade in Asia.

U.S. President Joe Biden nominated Powell for a second round at the Fed’s helm over Lael Brainard on Monday. Brainard, who was promoted from governor to vice-chair, was viewed by some to hold a more dovish stance on monetary policy than Powell.

U.S. Treasuries fell after Powell’s re-nomination was announced. Markets priced in a full quarter-point rate hike into the June 2022 Fed meeting, and also view a second by September and a third by December of that year, as inflationary pressures continue.

Curbing these pressures, while maintaining the economic recovery from COVID-19, will be the next challenge awaiting Powell in his new term.

“While investors no longer have to wonder about who will be leading the Fed for the next few years, the next big dilemma that the central bank faces is how to normalize monetary policy without upsetting markets,” Blanke Schein Wealth Management chief investment officer Robert Schein told Bloomberg.

Investors now await a slew of U.S. data, including the purchasing managers’ index (PMI), minutes from the Fed’s latest meeting, GDP, and initial jobless claims, that are due on Wednesday.

Across the Atlantic, Europe will also release its PMI later in the day. Bank of England Governor Andrew Bailey is also due to speak at a Cambridge Union event on Thursday.

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