Asian stocks fall as traders await ECB meeting

FIE PHOTO: A man wearing a protective mask is seen inside the Shanghai Stock Exchange building, in the Pudong financial district of Shanghai.

SINGAPORE Reuters -- Asian stocks fell the most in two weeks on Monday as concerns about rapid U.S. rate rises and slowing growth rattled investors, while the euro found support after Emmanuel Macron won a second term as French president.

The MSCI broadest index of Asia-Pacific shares outside Japan fell 1.6% to a six-week low, and a nudge from authorities extended steep losses for the Chinese yuan. CNY Japan's Nikkei fell 1.9%. Hong Kong's Hang Seng fell by 3%. S&P 500 futures fell by 0.8%, while FTSE futures and European futures fell by more than 1%. Oil fell 2.7%. O R The euro was generally stable at $1.0802, compared with broad dollar gains elsewhere, and touched an almost two-month high against a struggling sterling.

Macron saw off a far-right challenge, reassuring markets about France's commitment to an integrated Europe, even though his economic platform depends on parliamentary elections in June.

Vincent Mortier, chief investment officer of Amundi, said the absence of a change of course will reassure not only the other European Union countries but also the NATO.

The news was small relief for broader concern about high inflation and likely rate rises that have been pounding bond markets for months - exacerbated by the war in Ukraine and disruptions in China related to coronaviruses.

The idea of 75 bp hikes was floated by St. Louis Fed President James Bullard and Federal Reserve Chairman Jerome Powell, who said a 50 basis-point rate hike was on the table at May's meeting.

There are concerns around the rate and recession and are the biggest risks for investors with a focus on demand, said Candace Browning, head of global research at Bank of America.

The end of key stimulus programs and the rise of food and gasoline prices have made investors concerned about the low-income consumer's ability to spend. The 10-year yield was 2.8581% last week and the two-year yield was off the previous week's highs of 2.6399%.

More than a dozen buildings in China have been locked down due to the economic damage caused by the shutdown of Shanghai, as the restrictions in China have begun to spread.

China's blue-chip CSI 300 index fell to its lowest since June 2020, and investors have so far been underwhelmed by policy support for the flagging economy.

The middle of China's onshore currency trading band was fixed at its lowest level in eight months on Monday, which was seen as an official nod for the recent slide and was quickly sold to a one-year low of 6.5225 per dollar.

The dollar was on the march elsewhere, but trade was a bit sluggish due to public holidays in Australia and New Zealand. The Aussie fell by 0.8% to a six-week low of $0.7185 and the kiwi fell 0.4% to a two-month low of $0.6603.

The pound, after weak retail sales figures last week, fell 0.3% to an 18 month low of $1.2792. GBP crude futures dropped 2.7% to a two-week low of $103.88 a barrel. U.S. crude futures fell 2.6% to $99.38 a barrel.

Copper and iron ore fell in Asia, though soybean oil jumped after an Indonesian ban on palm oil exports.

The week ahead is headlined by U.S. growth data due on Thursday, European inflation figures due on Friday and a monetary policy meeting for the Bank of Japan.

The U.S. growth is expected to be steady around 1.1%, a bit slower than the COVID 19 rebound-juiced figures of the recent past, but probably robust enough to bear rate rises.

The BOJ meeting will be closely watched for any adjustments to economic projections or signs of a policy response to the yen, which has tumbled more than 10% in the past two months.

The price of the digital currency held above the resistance of $40,000.