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Asian stocks retreat as investors assess hawkish Fed; currencies trade mixed

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Stocks in Indonesia and Singapore led

declines among emerging Asian equities on Tuesday, while

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currencies in the region were mixed as cautious investors

digested hawkish comments from two U.S. Federal Reserve

officials overnight.

The comments came ahead of Fed chair Jerome Powell’s speech,

due later today.

Equities in Indonesia fell as much as 1.8%, hitting

their lowest level since July 2022, while stocks in Singapore

slipped as much as 1.1%.

Analysts at OCBC said that hawkish rhetoric from Fed

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officials Raphael Bostic and Mary Daly, who said they expect

rates to go somewhere over 5%, shook earlier market confidence

that the U.S. central bank was near a pivot point.

“While both officials are not voting members currently,

the de-risking could come from fears that Powell’s upcoming

speech could mirror the hawkish tone with some pushback as

well,” said Yeap Jun Rong, Market Analyst at IG.

In the Philippines, the country’s central bank chief

confirmed interest rates would likely need to rise a further 25

or 50 basis points at next month’s policy meeting, but added

that pressure to match Fed’s rate hikes was waning.

The peso rose for a fifth consecutive session,

adding as much as 0.2% to touch its highest level since June

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2022, while the country recorded a better-than-expected trade

deficit of $3.7 billion for November.

“The PHP may enjoy some appreciation momentum in the near

term on the improving balance of trade,” analysts at ING wrote,

adding that a potential drop in exports later in the year could

spell some renewed depreciation pressure on the currency.

Other regional currencies were mixed even as the U.S.

dollar hovered near a seven-month low.

The Indian rupee added 0.2%, while the Singaporean

dollar, the Thai baht and the South Korean won

declined between 0.1% and 0.2%.

The Chinese yuan advanced for the fifth trading

day, hitting a new near five-month high, riding on reopening

optimism.

IG’s Rong, however, added that the risk of virus waves after

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the Chinese New Year period could be a catalyst for some

jitters, potentially prompting profit-taking activities among

Asian emerging assets in the near term.

Elsewhere, Brazil’s real last stood at 5.2546 per

dollar, having fallen more than 1% on Monday after supporters of

former President Jair Bolsonaro stormed the capital. It had yet

to trade as of Asia hours on Tuesday.

HIGHLIGHTS

** Top losers on the Jakarta stock index include

Fuji Finance Indonesia Tbk PT and Geoprima Solusi Tbk

PT

** Top losers on the Singapore STI include Jardine

Matheson and Frasers Logistics & Commercial Trust

** U.S. consumer price index (CPI) data due on Thursday

Asia stock indexes and currencies

at 0705 GMT

COUNTRY FX RIC FX FX INDE STOCKS STOCKS

DAILY % YTD % X DAILY YTD %

%

Japan -0.14 -0.73 <.n2>

China EC>

India +0.22 +0.66 <.ns ei>

Indonesi -0.13 -0.13 <.jk a se>

Malaysia +0.02 +0.64 <.kl se>

Philippi +0.16 +1.51 <.ps nes i>

S.Korea 11>

Singapor -0.11 +0.61 <.st e i>

Taiwan +0.25 +0.86 <.tw ii>

Thailand -0.22 +3.22 <.se ti>

(Reporting by Himanshi Akhand in Bengaluru)

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