Asian stocks post biggest fall in two months on U.S. stimulus worries

Asian stocks fell 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.

EUROSTOXX 50 futures eased 0.1% while FTSE futures added 0.03%, indicating a mixed open for European stock markets. E-Mini futures for the S&P 500 ESc1 shed 0.5%. In a sea of red seen across markets, South Korea and Hong Kong topped losers and fell more than 2% each, Japan slipped 0.9% and Chinese stocks shed 1.6%. All touched milestone highs earlier this month.

MSCI’s broadest index of Asia-Pacific shares outside Japan shed 1.5% to 717.3 but was not far off a record high struck on Monday and is still up 8% so far this year. The index was on course to log its biggest fall since late November.

A flood of money supply, ultra-low or zero interest rates and COVID-19 vaccine rollouts have sparked a “buy everything” rally over the last several months. Some investors – pointing to skyrocketing prices of assets such as bitcoin or, on Monday, the soaring stockprice of short-squeezed videogame retailer Gamestop – are beginning to worry markets are entering bubble territory.

U.S. lawmakers agreed that getting COVID-19 vaccines to Americans should be a priority even as they locked horns over the size of a pandemic relief package. Disagreements have meant months of indecision in a country suffering more than 175,000 COVID-19 cases a day with millions out of work.

The dollar advanced to a near one-week high against a basket of currencies, as volatility in stocks sapped investors’ appetite for riskier currencies. The euro dipped to $1.2127.

Asian stocks post biggest fall in two months on U.S. stimulus worries, Reuters, Jan 26