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Title: Asia shares ease, dollar holds firm after Fed minutes

Aug 18, 2022 02:30AM ET

By: AnalysisWatch

Asian stocks fell on Thursday, tracking Wall Street's losses, as the U.S. Federal Reserve looks set to stay the course on raising interest rates, although signs it may not be as aggressive in tightening gave investors some hope.

The dollar rose overnight after the minutes of the Fed's July meeting indicated that a steady course of rate hikes was on the cards.

After U.S. stocks ended the previous session with slight losses, MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.4 percent. The index is up 1.3 percent so far this month.

Hong Kong's Hang Seng Index fell 0.73 percent, and China's blue-chip CSI300 index declined 0.94 percent.

Reflecting the mixed mood, Wall Street futures fell while European futures rose in afternoon trade.

Investors interpreted the minutes as a sign that the U.S. interest rate tightening cycle may be less aggressive than expected but that Fed policymakers remain committed to raising rates until inflation is contained.

Futures on the Pan-European Euro Stock 50 index were up 0.19% in early European trading, while German DAX futures were up 0.15% and FTSE futures were up 0.16%.

In comparison, S&P 500 e-mini futures fell 0.13%.

In Asia, ongoing geopolitical concerns continue to weigh on sentiment in the region, particularly in mainland Chinese equities.

10-year benchmark yields Treasuries initially rose in Asian trade but later retreated to 2.8676% compared with their U.S. close of 2.895% on Wednesday.

Two-year Treasury yields, which have been rising as traders anticipate higher Fed funds rates, stood at 3.2768% compared with a U.S. close of 3.295%.

Higher yields helped strengthen the dollar, which rose after the release of the Fed minutes. In early Asian trade, the dollar index gave up some of its overnight gains, but rallied later in the day and rose 0.09% to 106.74 points.

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