Asian stocks slid Monday after traders soured on the reflation trade in the wake of a hawkish pivot by the Federal Reserve. A gauge of the dollar was steady.
Equities fell in Japan, Australia and South Korea. The Singapore-traded SGX Nifty, an early indicator of India’s Nifty 50 Index’s performance, fell 1.01% at 15,591 as of 7 a.m.
The Nikkei 225 dropped as much as 3%, the biggest slide in more than a month. U.S. futures slipped after the S&P 500 retreated Friday, when commodities such as copper dropped and the dollar touched a two-month high on the prospect of less accommodative U.S. monetary policy.
The 10-year yield declined to 1.42% and the 30-year rate dipped below 2%. Short-maturity yields surged after Fed official James Bullard said inflation risks may warrant higher interest rates next year, an earlier liftoff than penciled in by many of his colleagues.
Gold stabilised after slumping last week. Oil climbed to about $72 a barrel as talks between world powers and Iran dragged on, potentially delaying the return of the latter’s energy exports.
In a light week for economic data, traders will be paying close attention to appearances by Fed policy makers, including Chair Jerome Powell, for any guidance on the winding back of stimulus. In his comments, Bullard also said that the central bank has started discussing tapering asset purchases.
