Asia FX, stocks retreat on Russia sanctions caution, dollar strength

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Asian currencies and most regional

share markets weakened on Thursday as US President Joe Biden

sought to persuade European leaders to impose more sanctions on

Russia, while the Federal Reserve’s hawkishness kept global

markets are under pressure.

“Uncertainty, rather than unadulterated fears of demand

shocks, is arguably the main driving force for the current

market dynamics of declining equities, boosted bonds –

corresponding to falling yields – and buoyant commodities,”

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analysts at Mizuho Bank said in a note.

MSCI’s broadest index of Asia-Pacific shares outside Japan

dropped 0.6%, while Japan’s Nikkei

retreated from a more than two-month high as a rise in crude oil

prices stoked inflation concerns.

In Asia, South Korean won weakened 0.6%, a day

after the country nominated International Monetary Fund official

Rhee Chang-yong as its new central bank chief. Rhee is expected

to maintain the Bank of Korea’s efforts to curb inflation, while

taking a less hawkish stance than his predecessor.

Elsewhere, Thai baht, Philippine peso,

Singapore dollar and Malaysian ringgit eased

marginally as the US dollar gained ground against major

currencies.

Overnight, US Treasuries witnessed a sharp sell-off, with

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the 10-year benchmark yields retreating from an

almost three-year peak, as investors assessed the US Federal

Reserve’s hawkish stance.

Asian bond markets also suffered a continued sell-off.

Singapore’s 5-year yields edged higher to touch

2.133% for the first time since December 2018.

The 10-year yields in Philippines, Malaysia

and Thailand edged higher, while

Indonesia’s 10-year benchmark yield slipped

slightly.

Among Asia’s equity markets, Singapore shares jumped

0.8% to their highest in four weeks, led by travel-related

stocks after the city-state further relaxed COVID-19 curbs for

fully vaccinated visitors.

The city-state’s flagship carrier Singapore Airlines

jumped 2.9%, transport services provider ComfortDelGro

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Corp advanced 4.2%, while resorts and casino developer

Genting Singapore added 3.8%.

Elsewhere, shares in Indonesia and the Philippines

gained about 0.5% each, while South Korea’s KOSPI

and Malaysian benchmark declined 0.5% and 0.2%,

respectively.

Meanwhile, the Philippine central bank, in a decision due

later in the day, is widely expected to keep its policy rate

unchanged.

Analysts at TD Securities expect the Bangko Sentral ng

Pilipinas to hike rates in the second half of this year, while a

Reuters poll predicted the overnight repurchase facility would

move up 50 basis points in the last quarter.

HIGHLIGHTS:

** Indonesian 5-year benchmark yields edges lower to 5.615%

** Thai FinMin sees high oil prices, inflation as temporary

** Singapore’s Olam expects delay in IPO of its food

ingredients unit

Asia stock

indexes and

currencies

at 0345 GMT

COUNTRY FX FX FX INDEX STOCKS STOCKS

RIC YTD YTD %

DAILY % DAILY

% %

Japan -0.04 -5.05 <.n22>

China C>

India i>

Indonesia -0.10 -0.77 <.jks e>

Malaysia -0.07 -1.44 <.kls e>

Philippines -0.06 -2.65 <.psi>

S.Korea 1>

Singapore -0.01 -0.63 <.sti>

Taiwan i>

Thailand i>

(Reporting by Sameer Manekar in Bengaluru; Editing by Simon

Cameron-Moore)