Asian shares set weekly losses

Asia-Pacific shares fell sharply on Friday, heading for a weekly loss, as investors worried about the potential for further tightening by the Federal Reserve and the impact on the economy.

Short-term US Treasury yields held near one-month highs, helping the dollar against major currencies.

The MSCI Asia Pacific Index fell 0.92% and was headed for a 1.37% weekly loss after losing 1.17% the previous week.

Mainland China blue chips lost 0.731%, while the Hang Seng fell 1.76%.

China’s factory-gate prices fell more than economists had expected in January, suggesting that domestic demand factors that have boosted consumer prices since the end of the zero-covid-19 policy are still not strong enough to revive upstream sectors.

Australia’s benchmark fell 0.762%, while South Korea’s Kospi fell 0.73%.

Japan’s Nikkei bucked the trend with a 0.253% gain, supported by several strong earnings reports.

The Treasury yields were around 4.48% in Tokyo after touching its highest since Jan. 6 at 4.513% overnight.

The 10-year yield fell to around 3.68% after rising 3.97% midweek, also the highest since Jan.

What about US Markets?

US stock futures were down 0.122% after the S&P 500 dropped 0.87% overnight. German DAX futures were down 0.92% at the reset, while UK FTSE futures were down 0.45%.

Earlier this week, investors cheered after the Fed head backed away from a more hawkish stance following last week’s stronger-than-expected jobs report.

Markets took Powell’s dovish stance as a green light for action, but a day later, there were hawkish Fed statements.

Money markets are currently seeing a peak in the current rate cycle of around 5.16% in July.

The US dollar index, including the euro and yen, rose slightly to 103.28, staying in the middle of its range this week.