Asian markets take a breather after Fed rate pause rally

BEIJING - Asian markets turned negative on Tuesday after their latest rally as high hopes the US Federal Reserve has finished hiking rates gave way to profit-taking.

Investors were unable to maintain the momentum seen after US officials hinted that the era of rising borrowing costs was over, while a jump in Treasury yields Monday revived jitters that there could still be one more lift to come.

Speeches by a number of decision-makers this week including governor Jerome Powell will be analysed for clues about the outlook, with some officials still reluctant to call an end to the tightening cycle.

That comes even as a string of figures in recent weeks have indicated that while it remained resilient, the world's number two economy was showing signs of slowing, and a jobs report Friday suggested the labour market was also softening.

On Monday, Minneapolis Fed chief Neel Kashkari said: "Before we declare that 'we’re absolutely done, we've solved the problem', let's get more data and see how the economy evolves."

He told Fox News that "we need to let the data keep coming to us to see if we really have got the inflation genie back in the bottle so to speak".

Still, markets are betting on a number of rate cuts next year totalling more than 100 basis points. 

All three main indexes on Wall Street ended slightly higher Monday, though the gains were tempered by a pick-up in 10-year Treasury yields, which came as a large amount of US debt hits the market.

Asian equities were on the back foot, with Hong Kong among the biggest losers after a three-day rally worth more than four percent, while Tokyo, Shanghai, Sydney, Seoul, Singapore, Wellington and Jakarta were also down.

Seoul was off more than two percent, having soared more than five percent in reaction to the reimposition of a ban on short selling.

Taipei and Manila bucked the trend.