Asia stocks falter, NZ $ stumbles as RBNZ signals hikes over


TOKYO: Asian stocks on Wednesday extended a global sell-off as U.S. debt ceiling negotiations dragged on without resolution, while the New Zealand dollar tumbled after the central bank caught markets off-guard by flagging that its tightening cycle is over.

The U.S. dollar – paradoxically – remained elevated amid safe-haven demand, which was also a driver of Treasuries and pushed yields lower.

Crude gained, though, as a warning from the Saudi energy minister to speculators raised the prospect of further OPEC+ output cuts.

The New Zealand dollar was one of the major movers in the early Asian day. It dropped more than 1 percent after the Reserve Bank of New Zealand wrong-footed markets by signaling it was done with its policy tightening cycle, after raising it by a quarter point. Market pricing had favored a half-point hike, and were also primed for an extension of the tightening streak.

A security official is seen next to a monitor showing the stock index price and Japanese yen exchange rate against the U.S. dollar after a ceremony marking the New Year ceremony marking the opening of trading in 2022 at the Tokyo Stock Exchange (TSE), amid the coronavirus disease (COVID-19) pandemic, in Tokyo, Japan, January 4, 2022. REUTERS/Issei Kato

Japan’s Nikkei sank 1.1 percent, extending its retreat from a post-bubble-era peak to a second day.

Hong Kong’s Hang Seng declined 1.2 percent, and mainland blue chips slid 0.8 percent.

MSCI’s broadest index of Asia-Pacific shares fell 0.7 percent.

U.S. equity futures stabilized slightly after sharp declines for the main indexes S&P 500 and the Nasdaq overnight.

Representatives of President Joe Biden and congressional Republicans ended another round of debt ceiling talks on Tuesday with no signs of progress, as the ostensible X-date of June 1 looms large.

Reports that the Treasury has asked federal agencies whether they can delay upcoming payments added to the sense of crisis.

“Payment prioritization is now real,” Chris Weston, head of research at brokerage Pepperstone in Melbourne, wrote in a client note.


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