HONG KONG- Gains in banks, energy and mining stocks lifted Asian equities a little higher on Tuesday as investors braced for aggressive US rate hikes and war disrupting oil supplies.
Oil futures rose nearly 3 percent to a two-week high in Asia.
The yen fell through the key 120 level against the dollar for the first times since 2016 and Treasuries extended losses after US Federal Reserve Chairman Jerome Powell on Monday flagged a more aggressive tightening of monetary policy than previously anticipated.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.2 percent led by gains in
Australia’s miner-and-bank heavy index, which hit a two-month high.
Japan’s Nikkei rose 1.7 percent to 27,276.
“This very sharp spike in commodity prices is actually having relatively mixed impacts … because we have some notable commodity exporters in this region, who would possibly stand to benefit,” said Manishi Raychaudhuri, Asia-Pacific equity strategist at BNP Paribas.
Meanwhile, “investors are coming to terms with the fact that the developed markets’ central banks would normalize monetary policy,” he said.
Powell had sparked a bond rout overnight after he told the National Association for Business Economics the US central bank was prepared to do what it takes to combat inflation and that bigger-than-usual hikes would be deployed if needed.
Treasuries and US stock futures remained on edge, with S&P 500 futures ESc1 down 0.3 percent and rates-sensitive Nasdaq 100 futures down 0.4 percent. Benchmark 10-year Treasury yields hit an almost three-year high of 2.3330 percent.
Fed funds futures are now pricing a two-third chance of a 50-basis-point rate hike in May.
The Japanese yen, also sensitive to rising US rates, fell past 120-per-dollar briefly and last bought 119.90.
