A rising US Dollar poses a headwind to Asia-Pacific markets after the Federal Open Market Committee (FOMC) raised its benchmark rate by 75 basis points in a widely expected move.
Chair Jerome Powell gave a slightly hawkish press conference, which increased the odds for a +5% terminal rate by May next year. Bond traders hit the sell button, increasing Treasury yields and the US dollar. The high-beta Nasdaq-100 Index (NDX) fell 3.39%.
Covid cases increased in China’s Zhengzhou on Wednesday, forcing local government officials to respond. A lockdown surrounding the Foxconn plant has been established until November 09, according to the city’s WeChat account. That could disrupt Apple’s iPhone production at a critical time ahead of the holiday shopping season. Apple fell 3.73% on Wednesday.
The People’s Bank of China (PBOC) eased their daily Yuan reference rate for the fourth straight day on Wednesday, suggesting that policymakers may be comfortable with a weaker Yuan. However, that patience may not extend further. The PBOC may establish a strong reference rate today, indicating uneasiness with the overnight move.
October’s Caixin purchasing managers’ index (PMI) is due at 01:45 UTC. China’s services sector unexpectedly contracted in October, according to data from the National Bureau of Statistics (NBS)
Analysts expect to see more weakness from today’s figure, with the Bloomberg consensus at 49.3. Caixin’s survey focuses on smaller and medium-sized firms compared to the NBS. A weaker-than-expected figure may intensify Yuan selling.