Passers-by wearing face masks are seen in front of an electronic board showing the average from the Nikkei in Japan, amid the coronavirus disease (COVID-19) pandemic, in Tokyo, Japan on November 1, 2021. REUTERS / Issei Kato

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  • MSCI Asia ex-Japan down nearly 1%
  • Fed minutes point to faster US rate hike
  • Spread of Omicron variant weighs more on sentiment
  • Rising US yields are supporting the dollar; gold fades

SHANGHAI, Jan.6 (Reuters) – Asian stocks fell on Thursday, prolonging a global slump after Federal Reserve meeting minutes showed U.S. interest rates rising faster than expected amid concerns regarding the persistence of inflation.

Concerns about rising U.S. rates combined with growing concerns about the rapid spread of the Omicron coronavirus variant to weigh on riskier assets. Read more

Asian stocks took inspiration from overnight losses on Wall Street. The Nasdaq (.IXIC) plunged more than 3% on Wednesday in its largest single-day percentage decline since February, and the S&P 500 (.SPX) fell the most since November 26, when news of the Omicron variant hit world markets for the first time.

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The largest MSCI Asia-Pacific stock index outside of Japan (.MIAPJ0000PUS) fell 0.95%, Australian stocks (.AXJO) slipped 1.53%, and the Japanese Nikkei stock index ( .N225) fell 2.08%.

Chinese blue chips (.CSI300) fell 1.37% as a private sector survey showed China’s service sector activity grew faster in December, but COVID outbreaks continued -19 weighed on the outlook. Read more

Elsewhere, a rotation of non-tech investors continued to hit top names, with the Sony Group (6758.T) collapsing 6.8%.

“There is a risk that the Fed will fall into the trap of making policy mistakes because it may need to raise interest rates faster than expected, but given when it comes out of quantitative easing, this could coincide with a slowdown in economic conditions. cycle and also lower inflation on base effects, ”said Carlos Casanova, senior economist for Asia at Union Bancaire Privée in Hong Kong.

“Of course, if you anticipate a faster rate of Fed price cuts, this doesn’t translate well for Asian asset classes, so you’re probably going to see more outflows from the region, which is will translate into both weaker stocks and also depreciating pressures on the FX front. “

Fed policymakers said at their December meeting that a “very tight” job market and uninterrupted inflation could force it to raise interest rates sooner than expected and start reducing its overall holdings as a second brake on the economy, according to the minutes of this meeting.

Fed officials were uniformly concerned about the pace of price increases that promised to persist, alongside global supply bottlenecks “through” 2022, according to the minutes. Read more

More hawkish-than-expected views from U.S. central bank officials also pushed U.S. Treasury yields higher. On Thursday, the US 10-year rate remained high at 1.6929%, just after Wednesday’s close at 1.7030%.

US 2- and 5-year yields, more sensitive to rate hike expectations, hovered around their highest levels since Q1 2020.,

The rise in US yields continued to support a firm dollar, although the currency lost ground against the yen after hitting five-year highs earlier this week, falling 0.13% to 115.95.

The euro was stable at $ 1.1311 and the dollar index was little changed at 96.161.

In commodities markets, global benchmark Brent crude fell 1.26% to $ 79.78 per barrel and U.S. crude fell 1.07% to $ 77.02 per barrel after producers of OPEC + have agreed to increase production. Read more

Spot gold was flat at $ 1,808.90 an ounce as rising US bond yields tarnished the precious metal’s luster.

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Reporting by Andrew Galbraith; Editing by Ana Nicolaci da Costa

Our Standards: Thomson Reuters Trust Principles.