Asian markets fall after weak performance on Wall St, oil falls

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A man wearing a protective mask, amid the coronavirus disease (COVID-19) outbreak, stands in front of an electric board showing the Nikkei index outside a brokerage in Tokyo, Japan, January 21, 2021. REUTERS/ Kim Kyung Hoon

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SINGAPORE, Jan 21 (Reuters) – Asian stock markets and U.S. futures fell on Friday after U.S. stocks took a hit overnight, hurt by lingering concerns over Federal Reserve tightening and data lower-than-expected economics and earnings.

MSCI’s broadest Asia Pacific ex-Japan equity index (.MIAPJ0000PUS) was down 0.8%, and the Japanese Nikkei (.N225) was down 1.66%. Oil prices fell sharply and were on course for their first weekly loss this year.

“The sell-off in US equities yesterday was brutal and will dominate Asia this morning,” said Rob Carnell, chief economist at ING in Singapore.

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“But there are pockets of optimism like China’s more accommodative monetary policy moves,” he added.

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The moves extended to Chinese equities, with the Hong Kong benchmark (.HSI) losing 0.24% after posting its best day in six months the previous day and Chinese blue chips (.CSI300) also losing 0, 5% after gains the day before.

China lowered its benchmark mortgage rates on Thursday, the latest in a series of monetary easing aimed at supporting an economy worsened by the country’s struggling real estate sector and concerns over the Omicron variant of the coronavirus. Read more

“The main divergence in equity market performance between the United States and Greater China can be attributed to a bifurcation of monetary policies,” said David Chao, global market strategist for Asia-Pacific (ex-Japan) at Investco.

China’s actions were “a very encouraging sign,” but the Fed’s actions could add short-term volatility to the market, he said.

Oil tumbled as OPEC+ struggled to meet its planned production boost targets and the specter of Russia’s invasion of Ukraine jittered global markets.

“Getting products to market is a major factor weighing right now, as demand remains firm as the world slowly reopens,” ING’s Carnell said.

U.S. crude fell 2.44% to $83.46 a barrel on Friday morning and Brent crude lost 2.55% to $86.14.

U.S. Treasury yields were slightly lower along the curve on Friday, after rising sharply earlier in the week as investors positioned themselves for the likelihood that the Federal Reserve will tighten monetary policy more aggressively to head off inflation.

Benchmark 10-year bond yields were last at 1.7791%, their lowest level in a week, after hitting a two-year high of 1.902% on Wednesday.

Rising yields had helped the dollar gain earlier in the week, although on Friday the dollar index remained broadly flat against a basket of six major currencies.

The greenback, however, lost ground against the safe-haven yen, falling to a one-week low of 113.8 per dollar, while the risk-friendly Aussie dollar AUD=D3> lost 0.39%.

Spot gold remains virtually unchanged at $1,838.41 an ounce.

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Reporting by Kanupriya Kapoor and Stella Qiu; additional reporting by Alun John; edited by Richard Pullin

Our standards: The Thomson Reuters Trust Principles.

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