A gauge of Asian equities trimmed earlier gains as equities in Hong Kong and mainland China extended their losses as China’s daily virus infections climbed to near the highest on record. 

Stocks rose in Japan and Australia, while US futures made small gains after technology stocks, which are typically more sensitive to interest rates, had dragged the S&P 500 lower on Monday.

Fed officials have broadly maintained their steadfast stance to fight against inflation. Yet San Francisco Fed president Mary Daly also said officials need to be mindful of the lags in the transmission of policy changes while her Cleveland counterpart Loretta Mester said she’s open to slowing the tempo of rate hikes. 

“In a year like this, it is so difficult and often a fool’s errand to read too much into any one speech from one Federal Reserve official,” Sarah Ponczek, financial adviser at UBS Private Wealth Management, said on Bloomberg Television. “The reality is that we do expect that the Federal Reserve is still likely going to raise interest rates again in December.” 

The dollar fell after advancing on Monday amid appetite for haven assets. Government bond-yield curves flattened in Australia and New Zealand with gains in short-maturity rates, following similar moves in the US on Monday. Treasury yields declined on Tuesday.

JPMorgan Chase & Co strategist Marko Kolanovic, who until recently had been one of the most vocal bulls on Wall Street, said risky assets may languish until the Fed reverses course on its hawkish campaign to raise interest rates. A near-term pivot is likely not in the cards and JPMorgan expects assets to still be “range bound with a more pronounced downside risk”.

Meanwhile, China reopening may only be a story for the second quarter of next year as the country is entering winter months, according to Dwyfor Evans, head of Asia Pacific macro strategy at State Street Global Markets. 

“To actually expect a very conservative political body to suddenly open up China and remove restrictions in November and into the most dangerous season as it were for these types of pandemic instances, we always thought that was very, very optimistic,” Evans said on Bloomberg Television.

Oil steadied around $80 per barrel as investors assessed a clouded supply outlook and concerns over weaker demand in China. Gold rose.

Cryptocurrency prices steadied in a lull from the selloff sparked by the demise of Sam Bankman-Fried’s FTX empire, but investors are braced for more ructions as further digital-asset sector bankruptcies loom. BM/DM