Asian Stocks Dip as OPEC Reduction in Oil Targets Raises Inflation Concerns

On Tuesday, Asian stocks decreased amid concerns over inflation following the surprise reduction in OPEC+ group’s oil output targets. Brent crude reached $85.3 per barrel, up 0.44% after surging over 6% overnight. Early European trades showed a rise in pan-region Euro Stoxx 50 futures of 0.33%, while S&P 500 e-minis ESc1 fell 0.07%. MSCI’s broadest index of Asia-Pacific shares outside Japan decreased by 0.4%, while Japan’s Nikkei stock index rose 0.3%. Hong Kong’s Hang Seng index dropped 1.1%, led by technology stocks, amid heightened Sino-U.S. tensions. On Monday, the Dow Jones Industrial Average climbed 0.98%, the S&P 500 increased 0.37%, and the Nasdaq Composite fell 0.27%.

The retreat in treasury yields was fueled by weak US manufacturing data, which has increased expectations for some investors that the Fed will cut rates later this year as the economy slows. Additionally, separate data released showed US construction spending weakened in February. 

The yield on benchmark 10-year Treasury notes was at 3.4151%, while the two-year yield touched 3.9676%. The US dollar reversed some losses incurred on Monday, however, continued to be on the defensive after weak economic data. The focus in Asia fell on the Reserve Bank of Australia (RBA), which has paused its tightening streak, as expected, but the outcome had economists divided. Meanwhile, the US dollar index gained against a basket of currencies of other major trading partners, while the European single currency remained flat on the day. Gold also experienced a slight dip in trading.