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Asian Stocks Down, PBOC Injects Cash for a Second Consecutive Month


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By Gina Lee – Asia Pacific stocks were mostly down on Tuesday morning, with concerns over the geopolitical risks in Ukraine and the U.S. Federal Reserve’s tightening of monetary policy to fight inflation continuing to mount.

Japan’s Nikkei 225 was down 0.27% by 9:26 PM ET (2:26 AM GMT) and South Korea’s KOSPI edged down 0.11%.

In Australia, the ASX 200 edged down 0.17% and Hong Kong’s Hang Seng Index edged down 0.15%.

China’s Shanghai Composite was up 0.44% while the Shenzhen Component gained 0.45%. The People’s Bank of China injected a net CNY100 billion ($15.73 billion) into the banking system earlier in the day via its medium-term lending facility (MFL). The MLF rate was unchanged at 2.85%.

Diplomatic efforts to resolve the crisis in Ukraine continue, with Russia continuing to refute U.S. allegations that it could invade Ukraine imminently. The tensions continue to keep the oil markets on edge, with WTI futures trading near the $95-mark, which it passed earlier for the first time since 2014.

Ukrainian President Volodymyr Zelenskiy’s “sarcastic” comments on Monday about the rest of the world predicting a Russian attack on Wednesday also saw the situation take a bizarre turn.

Markets were already jittery before the crisis over Ukraine flared, thanks to a possible withdrawal of stimulus by the Fed and high inflation.

“What we are seeing is a Fed that is reacting to inflationary prints even though many of the pressures on inflation are factors that the Fed really can’t solve,” Invesco chief global market strategist Kristina Hooper told Bloomberg.

“So that certainly increases the risks and reduces the clarity.”

Fed Bank of St. Louis President James Bullard said the central bank needs to move forward with its plans to raise rates to underline its inflation-fighting credibility. His colleague, Fed Bank of Kansas City President Esther George, added the Fed should take a systematic approach in removing policy accommodation but be careful to not “oversteer.”

More Fed officials, including Cleveland Fed President Loretta Mester and St. Louis Fed President James Bullard, will speak on Thursday. The U.S. Monetary Policy Forum, with speakers including Fed officials Charles Evans, Christopher Waller, and Lael Brainard, will take place a day later.

G-20 finance ministers and central bank governors will also meet from Feb. 17 to 18.

Meanwhile, the Fed will release the minutes from its latest meeting on Wednesday. The U.S. also releases its producer price index (PPI) later in the day, with China releasing its own PPI and consumer price index a day later.

Asian Stocks Down, PBOC Injects Cash for a Second Consecutive Month

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