Fed’s hawkish comments hit stocks, help dollar

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SINGAPORE — Asian stock markets slid for an eighth straight session on Wednesday, and the dollar weighed heavily as fresh hawkish comments from a Federal Reserve official prompted investors to remain cautious ahead of this week’s Jackson Hole symposium. .

Minneapolis Federal Reserve Chairman Neel Kashkari was the latest official to reiterate the Fed’s focus on controlling inflation above all else, and said on Tuesday his biggest fear was underestimating the extent of price pressures.

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The MSCI Asia ex-Japan equity index fell 0.2% in morning trade, on track for the index’s eighth successive daily decline, if sustained. The Japanese Nikkei fell 0.6%.

Wall Street stabilized overnight after two days of heavy losses as weak US data tempered concerns over rising rates. The data also eased pressure on short-term US Treasuries.

US services and manufacturing surveys disappointed on Tuesday and July new home sales fell to a 6½-year low.

« In some ways it’s good news, the weaker the data now, the less the Fed has to do, » said ING economist Rob Carnell, but he said there was no too many reasons to expect a change of tone from the Fed at this week’s Jackson Hole symposium.

“It may be a little early to jump on this weapon right now… if you start giving the market a little nudge so it can improve over time, you could end up undermining your own approach. »

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S&P 500 futures fell 0.3% in Asia and European and FTSE futures also fell slightly.

Brent crude futures are hovering around $100 a barrel on signs of U.S. demand and talk from Saudi Arabia of supply cuts. Rising oil prices helped support energy stocks in Australia.

With little on the calendar ahead of the Jackson Hole symposium, moves elsewhere were slight and the dollar held near a two-decade high against the euro.

The Australian and New Zealand dollars fell around 0.5%, pushing the Aussie to $0.6897.

The euro, which made a brief trip above parity on Tuesday, was struggling at $0.9950 as markets see soaring energy prices trigger a new wave of inflationary pressures that will dampen growth.

It had hit a 20-year low of $0.9901 on Tuesday.

The Chinese economy is also sluggish and modest interest rate cuts have only drawn attention to the weakness in the real estate sector and the lack of confidence and demand for credit.

The yuan fell about 0.2% to 6.8519 per dollar. The Hang Seng fell 0.9% and onshore blue chips 0.7%.

(Editing by Ana Nicolaci da Costa)


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