Asia stocks suffer limited losses as US dollar, bonds buckle

Traders are seen in front of a screen with trading figures in red at Thailand Stock Exchange building in Bangkok, Thailand March 13, 2020.

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Asia stocks battled to hold ground today after a furious flight from United States (US) assets undermined Wall Street and the dollar, while concerns about the independence of the Federal Reserve piled fresh pressure on Treasuries.

Relatively limited losses in Asia did spark talk that funds could be reallocating money to equities in the area, though the impact of tariffs on economic growth remained a major drag.

President Donald Trump’s increasingly vocal attacks on Fed Chair Jerome Powell for not cutting interest rates saw Wall Street indexes shed around 2.4% on Monday and the dollar hit three-year lows.

“The ‘sell America’ trade was in full flight,” said Tapas Strickland, head of market economics at NAB.

“Whether or not President Trump is legally able and willing to move against the Fed, the jousting underscores the loss of US exceptionalism and the very real policy risk for investors.”

The selling did abate somewhat in Asia, allowing S&P 500 futures to bounce 0.3% and Nasdaq futures 0.4%.

The market faces another test from earnings this week, with 27% of the S&P 500 due to report. Tesla is due later in the session, having already shed almost 6% on Monday amid reports of production delays.

Others out this week include Alphabet and a host of high-profile industrials including Boeing, Northrop Grumman, Lockheed Martin and 3M.

The fallout from Wall Street still only saw Japan’s Nikkei ease a slim 0.2%, while MSCI’s broadest index of Asia-Pacific shares outside Japan held steady.

Chinese blue chips added 0.2% as Beijing warned other countries against striking trade deals with the United States at China’s expense.

European shares also saw restrained losses, with futures for the EUROSTOXX 50 and DAX down 0.5% and FTSE futures off 0.1%.