SYDNEY- Asian share markets slipped on Monday as investors braced for a Federal Reserve meeting at which it is expected to confirm it will soon start draining the massive lake of liquidity that has supercharged growth stocks in recent years.
Adding to the caution were concerns about a possible Russian attack on Ukraine with the US State Department pulling out family members of its embassy staff in Kyiv.
The New York Times reported President Joe Biden was considering sending thousands of US troops to NATO allies in Europe along with warships and aircraft.
That might be one reason EUROSTOXX 50 futures slipped 0.5 percent, while FTSE futures fell 0.4 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.8 percent and Japan’s Nikkei 0.6 percent. Chinese blue chips fell 0.4 percent, getting little traction from a recent easing in policy by Beijing.
However, Wall Street futures bounced after last week’s drubbing, with the S&P 500 futures ESc1 up 0.7 percent and Nasdaq futures 0.8 percent.
Edgy 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 percent in March and three more to 1.0 percent by year end.
“With inflation eye-wateringly high, the Fed is on course to steadily remove the ultra-accommodative monetary policy that has been a key prop to stock prices for over a decade now,” said Oliver Allen, a market economist at Capital Economics.
The prospect of higher borrowing costs and more attractive bond yields took a toll on tech stocks with their lofty valuations, leaving the Nasdaq down 12 percent so far this year and the S&P 500 nearly 8 percent.
