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Tech stocks drift lower a mid hawkish Fed tilt

• The Dow Jones Industrial Average outperformed both the S&P 500 and the Nasdaq Composite again. The S&P 500 rose 0.2%, while the technology-heavy Nasdaq dipped 0.5%. The Dow was up by 0.6%.

• Fed fund futures — a market for hedging against or betting on future interest rate moves — are pointing to a roughly 75% chance that the central bank will lift US interest rates from historic lows by June next year, up from about 60% a month ago, according to data compiled by CME Group.

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• The shift was reflected in short-term US government bonds. The yield on the two-year US Treasury note rose to its highest level since March last year, hitting 0.64%. The 10-year Treasury yield rose to 1.68% from a 1.62% close on Monday.

• Since the 10-year yield began rising from 1.55% on Friday, the Nasdaq is down almost 2%. The move lower in tech limited the gain in the S&P 500. Tech names play a major role in the index, so big moves in that sector tend to move the market benchmark.

• Importantly, economically-sensitive stocks were performing well even as short-term rates continued their rise. Sometimes, when markets reflect higher chances of a rate hike by the Federal Reserve, such stocks falter.

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• Overall, Jerome Powell’s reappointment reduces uncertainty, and hence should be a positive for risk assets.

• European shares slumped to a three-week low as the regional Stoxx 600 index closed down 1.3%. Several countries in the EU have been forced to reimpose pandemic restrictions because of surging coronavirus case numbers, shaking a key market belief that developed economies wouldn’t go back down that route.

• Asian equities moved slightly lower on Tuesday, as cautious sentiment prevailed with Powell’s re-nomination. Hong Kong’s Hang Seng gauge down 1.2%, extending its losing streak for the fifth straight session and closing at its lowest level since early October.

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• Technology stocks tracked losses seen by their US peers, with Chinese tech giant Tencent down 2.2% while Alibaba slipped 2.6% and Meituan plunged 2.5%. The Hang Seng Tech index declined by about 1.3.

• Chinese stocks closed mixed, with the Shanghai composite up 0.2% to 3,589.09 while the Shenzhen Component slipped 0.4% to 14,905.13.

• The Straits Times Index fell 0.3% to close at 3,227.53 points as sentiment wavered due to a faster-than-expected rise in Singapore’s headline inflation.

• The consumer price index jumped 3.2% year on year in October, crossing the 3% mark for the first time since March 2013. This was higher than the Bloomberg median forecast of a 2.9% increase.

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