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Indian Morning Briefing: Asian Markets Mostly Lower; Focus on Outcome of Fed Meeting

01/24/2022 | 10:16pm EDT
SUBSCRIBER NOTICE: This newsletter will resume at 0300 GMT Thursday. Markets in India are closed on Wednesday, Jan. 26, in 
observance of Republic Day. 
DJIA              34364.50     99.13     0.29% 
Nasdaq            13855.13     86.21     0.63% 
S&P 500            4410.13     12.19     0.28% 
FTSE 100           7297.15   -196.98    -2.63% 
Nikkei Stock      27022.33   -566.04    -2.05% 
Hang Seng         24303.98   -352.48    -1.43% 
Kospi              2734.67    -57.33    -2.05% 
SGX Nifty*        16980.00     -77.0    -0.45% 
*Jan contract 
USD/JPY   113.77-78   -0.18% 
Range     114.10   113.75 
EUR/USD   1.1309-12   -0.13% 
Range     1.1332   1.1310 
CBOT Wheat March $8.004 per bushel 
Spot Gold $1,840.64 -0.1% 
Nymex Crude (NY) $83.75 -$1.39 

The Dow industrials, S&P 500 and Nasdaq Composite all finished the day higher after falling sharply in morning trading, a wild close to a volatile day in U.S. stocks.

By the end of the day, the Dow Jones Industrial Average had added 0.3% after being down more than 1000 points in the morning. The S&P 500 also added 0.3%.

Popular technology stocks were among the hardest hit early on, but they too rallied. The tech-heavy Nasdaq Composite closed about 0.6% higher after trading more than 4% lower earlier in the session.

Investors are bracing for a Federal Reserve meeting this week in which the central bank is expected to shed more light on its plans to combat surging inflation. The market has also been spooked by mounting tensions between the West and Russia over the military buildup on the border with Ukraine.

At its lowest point, the broad S&P index was in correction territory, defined as a 10% drop from a recent high. It ended the day around 8% from its record three weeks ago.


Japanese stocks were broadly lower as concerns continue about the Fed's pace of tightening and the spread of the Omicron variant in Japan. E-commerce, electronics and transportation stocks were leading the declines. Covid-19 infection trends in Japan were in focus, as the government is considering adding several prefectures to the areas subject to tighter operating restrictions for restaurants. A two-day U.S. central bank policy meeting is scheduled to start later in the day. The Nikkei Stock Average was 1.2% lower at 27264.34.

South Korea's benchmark Kospi fell 1.2% to 2758.45 in early trade, dragged by energy, banking and steel stocks. Fears of aggressive Fed monetary policy tightening and tensions between the West and Russia over Ukraine weighed on sentiment. Foreign and institutional investors remained net sellers in morning trade, despite South Korea reporting its strongest annual economic growth in 11 years--the latest sign of recovery from the pandemic-induced slump.

Hong Kong's Hang Seng Index fell 1.6% to 24251.52, with focus likely to remain on the outcome of the upcoming Federal Reserve meeting, KGI Securities said. Investors were likely watching for more hints on how fast the U.S. will increase interest rates and shrink its balance sheet, KGI Securities added. Declines were seen across sectors.

Chinese stocks were lower in morning trade, weakening from Monday's slight upturn after broad losses earlier this month. The benchmark Shanghai Composite Index was down 0.6% at 3503.35, while the Shenzhen Composite Index shed 0.5% to 2379.82. The ChiNext Price Index, a measure for emerging industries startups, dropped 0.3% to 3046.29. Despite the early losses, the market was likely in a recovery phase, China Fortune Securities said. The brokerage pointed out that substantial funds have been flowing into the Chinese market from Hong Kong investors in recent sessions, a sign of A-shares' attractive valuations and favorable risk-reward profiles. Technical analyses also show upward momentum in the indexes, China Fortune added.


The JPY strengthened against most G-10 and Asian currencies in early Asian trade, as continuing concerns over Fed tightening and rising geopolitical tensions boosted the safe-haven allure of the Japanese currency. Prospects of a Fed rate-increase cycle and balance-sheet reduction to tackle inflation are rattling markets, Phillip Securities Research said, adding that escalating U.S.-Russia tensions over Ukraine have encouraged demand for havens. USD/JPY fell 0.2% to 113.76 and AUD/JPY edged 0.1% lower to 81.34, while SGD/JPY was little changed at 84.66.


Gold was slightly lower in early Asian trade, although prices of the precious metal may find support from rising ETF inflows amid rising geopolitical risks. Inflows into gold backed ETFs continued to surge, thanks largely to the metal's draw as a safe-haven asset, ANZ said. "A laundry list of geopolitical risks will likely lead to safe-haven flows for gold that should help it soon break above the $1,850 level," Oanda said. Spot gold fell 0.1% to $1,840.64.


Oil rose in early Asian trading amid signs of market tightness, with rising uncertainties around Russia-Ukraine tensions also supporting prices, ING said. The bank said capacity constraints and other production issues among OPEC+ producers may mean supplies could increase at a slower pace than the agreed monthly increment of 400 million barrels a day. Citing Commodity Futures Trading Commission data, ING noted that traders have increased their net long positions in WTI over the previous week, reflecting demand optimism. Front-month Brent rose 0.6% to $86.77/bbl, while WTI gained 0.4% to $83.67/bbl.

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(END) Dow Jones Newswires

01-24-22 2215ET

Stocks mentioned in the article
ChangeLast1st jan.
ALPHABET INC. 2.84% 2321.01 Delayed Quote.-19.88%
DJ INDUSTRIAL 1.47% 32196.66 Real-time Quote.-11.40%
US DOLLAR / RUSSIAN ROUBLE (USD/RUB) 0.00% 64.5 Delayed Quote.-13.93%
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