SPY411.49+2.97 0.73%
DIA337.86+2.73 0.81%
IXIC13,900.19+70.88 0.51%

EMERGING MARKETS-Asian markets subdued ahead of Fed meet, Indonesian rupiah eases

· 03/17/2021 00:29
EMERGING MARKETS-Asian markets subdued ahead of Fed meet, Indonesian rupiah eases

Graphic: World FX rates http://tmsnrt.rs/2egbfVh

Graphic: Foreign flows into Asian stocks https://tmsnrt.rs/3f2vwbA

Fed's dot-plot could signal one rate hike in 2023 - analyst

Indonesian rupiah, stocks off 0.4% ahead of Thursday c.bank meet

Bank Indonesia seen keeping rates at record low

Strong export data shields Singapore equities from deeper losses

- Most Asian currencies edged lower and equity markets were subdued ahead of the U.S. Federal Reserve's policy meeting, where investors will closely look for signals of possible interest rate hikes in 2023 and comments on rising bond yields.

A mixed session on Wall Street and spike in 10-year U.S. Treasury yields overnight kept markets on edge, and Asian bond yields remained close to multi-month highs scaled recently on expectations of higher inflation and economic growth.

While Fed policymakers are expected to paint a rosy picture for U.S. economy in 2021, investors have been worrying that this may cause a potential increase in interest rates sooner than earlier expected, or that asset purchases might taper off. nL1N2L82OT

"I don't think there'll be a pushback against higher yields. We could see a risk that the dot-plot for 2023 will show a hike, but I think Chair Jerome Powell is going to downplay the significance of the dot-plot," said Sim Moh Siong, FX Strategist at Bank of Singapore.

"I think the market has more or less priced-in the likelihood that they could show a dot-plot of one hike. If it remains unchanged for 2023, it will send a very dovish signal."

Indonesia's rupiah IDR= and benchmark share index .JKSE fell most in the region, with both down 0.4%, ahead of its own central bank meeting on Thursday, with rates expected to be held at record lows. nL4N2LD2I8

The rupiah has weakened nearly 4% since its last peak on Feb. 16, and since then, benchmark 10-year government bond yields ID10YT=RR have spiked about 49.5 basis points to 6.756%.

Worries of capital outflows in emerging markets have been rife due to the rising U.S. yields, prompting most Asian central banks to reaffirm support for bond markets and spell out their level of tolerance towards potential spikes in inflation.

Analysts at OCBC said they do not expect Asian central banks to rush to hike rates ahead of the Fed, saying the markets' near-term rate hike pricings seemed aggressive as U.S. rates would likely stay unchanged till end-2022 at least.

Singapore's Straits' Times index .STI slipped marginally, shielded from broader losses by strong February adjusted non-oil exports data, which recorded a 8.2% rise versus the preceding month and overshot expectations. nB8N2JG00G

Philippines shares .PSI climbed about 0.5%, bouncing back after a sharp drop on Monday when news of a virus spike and fresh restrictions battered the market.

Metropolitan Bank and Trust MBT.PS gained over 3%, while Aboitiz Equity Ventures AEV.PS added 2.8%.


HIGHLIGHTS:

** Top losers on FTSE Bursa Malaysia Kl Index .KLSE include Sime Darby Bhd SIME.KL down 3.23% and Hartalega Holdings Bhd HTHB.KL down 1.64%

** Top losers on the Jakarta stock index .JKSE include Akbar Indo Makmur Stimec Tbk PT AIMS.JK down 7% and Bank Ganesha Tbk PT BGTG.JK down 7%

** Malaysia's 10-year benchmark yield is up 0.8 basis points at 3.471%​​



Asia stock indexes and currencies at 0408 GMT





COUNTRY

FX RIC

FX DAILY %

FX YTD %

INDEX

STOCKS DAILY %

STOCKS YTD %

Japan

JPY=

-0.09

-5.35

.N225

-0.22

8.79

China

CNY=CFXS

+0.05

+0.40

.SSEC

-0.31

-1.07

India

INR=IN

+0.00

+0.71

.NSEI

0.04

6.68

Indonesia

IDR=

-0.31

-2.80

.JKSE

-0.44

5.06

Malaysia

MYR=

-0.11

-2.34

.KLSE

-0.23

-0.43

Philippines

PHP=

-0.01

-1.24

.PSI

0.52

-7.66

S.Korea

KRW=KFTC

-0.12

-3.97

.KS11

-0.96

5.71

Singapore

SGD=

-0.14

-1.92

.STI

-0.11

9.08

Taiwan

TWD=TP

-0.26

+0.52

.TWII

-0.32

10.38

Thailand

THB=TH

-0.13

-2.70

.SETI

0.15

8.08



(Reporting by Rashmi Ashok and Nikhil Subba in Bengaluru; Editing by Simon Cameron-Moore)

((Rashmi.Ashok@thomsonreuters.com; +918061822604;))