Emerging markets: Thai baht and Philippine peso slip 0.3% each as Asian equities retreat on hawkish policy views

Image from The Nation Thailand/ANN

BANGKOK, April 12 (Reuters): Asian equities came under pressure on Tuesday as broadening inflationary risks prompted major central banks to move towards policy normalisation and aggressive rate hikes, while most currencies edged lower on US dollar strength.

Benchmarks in the Philippines, South Korea, Singapore, India's Nifty 50, and Thailand lost between 0.5% and 1.3%, with Indonesian shares reversing course from earlier in the day to slip up to 0.7%.

Investors await US. March inflation data, which is likely to show that consumer prices increased by the most in 16-1/2 years, according to a Reuters poll, reinforcing the US. Federal Reserve's stance of aggressive tightening.

Analysts at Maybank observed that a lower-than-expected inflation data could dampen the strength in US Treasuries and dollar, while another "multi-decade high could reinforce further yield and dollar uptick".

The dollar index, which measures the greenback against a basket of major currencies, stood at 100.07, while US 10-year Treasury yields were at their highest level since December 2018, pressuring risk-sensitive Asian markets.

Regional bond yields reacted in tandem, with top yielding bonds in the region - India and Indonesia - scaling multi-year highs as investors exit emerging market bonds amid growth concerns.

"We expect foreign investor flows to stay muted in second quarter, on defensive investor sentiment and higher global rates," analysts at Barclays said.

They added that foreign investor interest in Indian bonds is likely to remain subdued on rupee caution, while the pace of outflows in China is not likely to sustain.

Also on investors' radar will be a slew of central bank meetings later this week - Bank of Korea, the Monetary Authority of Singapore, the European Central Bank, and the Reserve Bank of New Zealand.

A Reuters poll showed Singapore's economy likely expanded at a slower pace in the first quarter, with the city-state's MAS likely to tighten policy on Thursday as inflation risks loom large on the horizon.

Among regional currencies, the South Korean won was on track to decline for a fifth straight day, weakening up to 0.4% to hit its lowest since March 16.

The Thai baht and the Philippine peso slipped as much as 0.3% each, with the peso set for a fourth straight session of losses. India's rupee weakened 0.2% to hit its lowest level this month. - Reuters