Steeper sell-off looks likely as ECB, BoE officials await views

The steepest market sell-off of the year so far looked to be fizzling out on Tuesday, as traders waited to see if the head of the Federal ReserveFederal Reserve and a number of top ECB and BoE officials gave any new insights later on where interest rates are headed.

The Australian dollar had gone up after its central bank signalled it would keep hiking while the yen went galloping higher after some unusually strong Japanese wage data.

Europe started to get mixed, with the euro and pound both fractionally lower and only London's FTSE making any real headway out of the main share indexes as BP became the latest oil giant to post bumper profits.

Two of the top policymakers, Isabel Schnabel and France's Fran ois Villeroy de Galhau, made speeches, as well as two Bank of England deputy governors and chief economist.

Then Federal Reserve Chairman Jerome Powell arrives at the Economic Club of Washington during US trading, along with US President Joe Biden's State of the Union address.

It's still all about the central banks, but you are still trying to understand their reaction function, said Sahil Mahtani, a multi-asset strategist at Ninety One, pointing out whether borrowing costs keep going up.

Interest rates in rich countries such as the United States have gone up at the third fastest rate since the early 1970's over the last year, which is why the firm believes that recessions will take hold in major economies.

The market is positioned for a soft landing, and we are positioned for a hard landing, Mahtani said.

Asian stocks had mostly stabilized overnight after they, like most global share markets, had seen steep losses on Monday following last week's strong US jobs data that bolstered the case for more Fed hikes.

MSCI's broadest index of Asia-Pacific shares outside Japan ended up 0.2 percent, while Australia's S&P ASX 200 ended down nearly 0.5 percent after the RBA delivered its ninth consecutive hike and signaled more. Australia has the highest cash rate in a decade, at 3.35 percent.

Oil went up for a second straight session after Monday's devastating earthquake in T rkiye shut down one of the region's major oil export terminals.

Brent fell by $1.74, or 2.15 percent, to $82.73 per barrel, while West Texas Intermediate went up $1.70, or 2.29 percent, to $75.81 per barrel.

Despite the recent gyrations in bond markets, benchmark European yields on the German bund were trading at 2.32 percent where they were a week ago.

Italy's 10 year yield was up around 5 basis points at 4.198 percent on the day, leaving the closely watched gap between the two at 187 bps.

Kerry Craig, JPMorgan Asset Management's global market strategist, said that central banks dominate the markets and the repricing of rates once again.

Since the beginning of the year, the equity markets have had a strong run so seeing an air pocket emerge is no big surprise.