HONG KONG, Nov. 23 (Reuters) – Asian stocks weakened on Tuesday, following a pullback on Wall Street as traders stepped up their bets on U.S. rate hikes in 2022 after President Joe Biden picked Reserve Chairman federal Jerome Powell to lead the central bank for a second term.

The London market showed a softer open with FTSE futures at 0.21%, while E-mini futures for the S&P 500 index remained stable.

The MSCI index of Asia-Pacific stocks outside Japan fell 0.52%, while the Hang Seng index in Hong Kong slipped 1%.

China’s benchmark CSI300 cut morning losses to stay just above the red, led by real estate stocks after Chinese banks were urged to issue more loans for real estate projects.

The Australian S & P / ASX 200 outperformed, closing 0.79%, driven by mining and energy stocks. Japanese markets were closed for a public holiday.

On Monday, President Biden asked Powell to continue as Fed chairman and Lael Brainard, the other top candidate for the job, for vice-president. The news initially supported Wall Street stocks, before the market retreated in the afternoon with the S&P 500 and Nasdaq Composite closing from historic highs. The dollar attracted strong support.

Riskier assets have been rocked again in recent sessions amid rising COVID-19 cases in Europe and renewed restrictions, watering investor hopes for a faster recovery in consumption and consumption. growth in the world.

Outgoing German Chancellor Angela Merkel said the latest wave is the worst the country has seen so far, as Austria entered a new lockdown on Monday.

Powell’s current tenure, which has focused on creating jobs from a focus on inflation, has been positive for risky assets, with the S&P gaining 69.7% since its inception. nomination.

“The US dollar looks set to hold on to its gains after Powell’s re-appointment as it leaves room for markets to flirt with the idea of ​​a faster cut,” TD Securities analysts said in a note. .

The talk of US rates kept the dollar index well supported near a 16-month high. The greenback was also near a 4.5-year high against the yen in the first trades on Tuesday.

US Treasury yields have been dragged higher by two-year bonds, which generally move with interest rate expectations. It reached its highest level since early March 2020.

“The market expects the odds of a rate hike to increase next year… it is widely expected (that we will have) a rate hike three to four times higher next year,” said Edison Pun, analyst. main market at Saxo Markets.

In commodities, spot gold rose 0.19% to $ 1,808.4 an ounce, matching Monday’s losses. Gold prices were under pressure as Powell’s appointment raised expectations that the central bank would stay the course on declining economic support.

Oil prices were in the red again after a short rebound the day before recent losses on reports that OPEC + may adjust its plans to increase oil production if major consuming countries release crude from their reserves or if the coronavirus pandemic is slowing demand.

Brent crude fell 0.49% to $ 79.31 a barrel, US crude fell 0.7% to $ 76.21 per barrel at 0521GMT.

The US Department of Energy is expected to announce a loan of oil from the Strategic Petroleum Reserve on Tuesday, in coordination with other countries, Reuters reported earlier.

Reporting by Kane Wu in Hong Kong Editing by Shri Navaratnam

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