Investors express cautious tone in anticipation of news from the World Economic Forum in Davos
While U.S. markets were closed Monday, Asian shares fell today, with Hong Kong’s equities leading the losses to shed nearly 2% amid jitters over Chinese markets. The Shanghai Composite index, however, recovered from early losses, adding 0.27%. In Tokyo, the Nikkei 225 gave up 0.66% after a former Bank of Japan official said that the central bank is preparing to end its negative interest rate policy. Elsewhere in the region, South Korea’s Kospi slipped 1.12% and the S&P/ASX 200 in Australia gave up 1.09%.
In early pre-market deals, US stock index futures were lower as risk-off sentiment continued to dominate global financial markets. Wall Street now awaits December retail sales data due Wednesday. In a wider picture, the tone on Wall Street remains buoyed amid hopes that inflation is cooling enough for the Federal Reserve to cut interest rates several times this year.
Meanwhile, European stocks saw a bearish start to the session Tuesday, as market participants continue to express a cautious tone in anticipation of news from the World Economic Forum in Davos. Heading for a five-week low, the regional Stoxx 600 index was down 0.4% in early trading, with most sectors in the red. On the data front, wage growth in the UK fell at one of the fastest paces on record, thus adding to expectations that the Bank of England will cut rates in the coming months.
The dollar rose to a one-month high and Treasury yields rose as traders digested the latest comments from Fed officials pushing back against bets on aggressive interest rate cuts this year. For the first time in more than two weeks, the USD index challenged the 103.00 figure to register local highs in the 103.15 area and was elevated in recent trading. The safe-haven greenback is also buoyed by risk aversion across the financial markets and could stay above 103.00 in the near term.