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GLOBAL MARKETS-Asian stocks weaken on stimulus worries, dollar holds firm

Published 2021-01-25, 10:11 p/m
© Reuters.

* Asian stock markets fall across-the-board

* Dollar supported by lower risk appetite

* Fed meets on Tuesday-Wednesday but no fireworks expected

* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Alwyn Scott and Anshuman Daga

NEW YORK/SINGAPORE, Jan 26 (Reuters) - Asian stocks dipped on Tuesday, retreating from record highs as lingering concerns about potential roadblocks to the Biden administration's $1.9 trillion stimulus weighed on sentiment, dragging U.S. Treasury yields to three-weeks lows.

The lower risk appetite lent some support to the dollar against a basket of currencies, while oil prices edged down.

In a sea of red seen across Asian markets, South Korea .KS11 and Hong Kong HSI topped losers and fell 1.7% each, Japan .N225 slipped 0.6% and Chinese stocks .CSI300 shed 1.5%. All have touched milestone highs this month.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dipped 0.7% to 722.7 but was not far off from a record high struck on Monday and is still up 9% so far this year.

Australian stock markets were closed for a national public holiday.

E-mini futures for the S&P 500 EScv1 slipped 0.26%.

All eyes were on Washington as U.S. lawmakers agreed that getting COVID-19 vaccines to Americans should be a priority even as they locked horns over the size of the pandemic relief package. immediate question now is when stimulus aid will be approved and how much?" said Christopher Grisanti, chief equity strategist at MAI Capital Management.

Financial markets have been eyeing a massive package, though disagreements have meant months of indecision in a country suffering more than 175,000 COVID-19 cases a day with millions out of work.

Fourth-quarter gross domestic product data for the United States, Germany and France due out this week may cool sentiment.

Overnight, the Nasdaq index .IXIC scaled a new peak and added 0.7% on hopes of strong earnings later this week from technology titans, but the Dow Jones Industrial Average index .DJI struggled to keep pace and fell 0.12%. .N

European shares closed at two-week lows as a slump in German business morale underscored the damage from tighter COVID-19 restrictions. .EU

U.S. policymakers are expected to keep the monetary spigot open when the Federal Reserve's Federal Open Market Committee meets on Tuesday and Wednesday.

"We expect the January FOMC to repeat and reinforce the Fed's existing dovishness, which is still significant given the recent taper discussions and other central banks' considerations to adapt policy," Ebrahim Rahbari, FX strategist at CitiFX, said in a report.

"Dovish Fed policy is a key driver for our view of upside in risk assets and bearish USD view. We therefore continue to watch Fed-speak and potential policy changes closely," he said.

The dollar advanced to a near one-week high against a basket of currencies, as volatility in stock markets around the globe sapped investors' appetite for riskier currencies.

The euro slipped slightly overnight to $1.2142 and held around those levels in Asia trade.

Benchmark 10-year U.S. Treasury yields US10YT=RR held where they left off in New York at 1.0414%, having hit a three-week low of 1.0300% overnight. US/

Brent crude LCOc1 fell 0.2% to $55.75, having risen nearly 1% on Monday. O/R

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http://tmsnrt.rs/2EmTD6j

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