GLOBAL MARKETS-Asian stocks post biggest fall in 2 months on U.S. stimulus worries

* Key Asian stocks gauge sheds 1.6%
* European stock futures indicate mixed open
* Dollar supported by lower risk appetite
* Fed meets on Tuesday-Wednesday but no fireworks expected
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Anshuman Daga
SINGAPORE, Jan 26 (Reuters) - Asian stocks fell on Tuesday,
retreating from record highs as lingering concerns about
potential roadblocks to the Biden administration's $1.9 trillion
stimulus weighed on sentiment, dragging U.S. Treasury yields to
three-weeks lows.
The lower risk appetite lent some support to the dollar
against a basket of currencies, while oil prices edged down.
EUROSTOXX 50 futures STXEc1 eased 0.1% while FTSE futures
FFIc1 added 0.03%, indicating a mixed open for European stock
markets. E-Mini futures for the S&P 500 ESc1 shed 0.5%.
In a sea of red seen across markets, South Korea .KS11 and
Hong Kong HSI topped losers and fell more than 2% each, Japan
.N225 slipped 0.9% and Chinese stocks .CSI300 shed 1.6%. All
touched milestone highs earlier this month.
"There have been some warning bells from different parts of
the world as we've seen more lockdowns in Europe, U.S and Asia,"
said Vasu Menon, senior investment strategist at OCBC Bank
Wealth Management.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS shed 1.5% to 717.3 but was not far off a record
high struck on Monday and is still up 8% so far this year. The
index was on course to log its biggest fall since late November.
"You need to see delivery on the economic data front, on
earnings and on enough vaccines being distributed," Menon said,
adding that uncertainty over the timing of the U.S. stimulus
package was damaging market sentiment.
Simmering tensions in the Taiwan Strait and the South China
Sea also added to the reasons for caution in Chinese markets,
where a jump in small-cap short bets has also caught regulators'
attention.
A flood of money supply, ultra-low or zero interest rates
and COVID-19 vaccine rollouts have sparked a "buy everything"
rally over the last several months. Some investors - pointing to skyrocketing prices of assets
such as bitcoin or, on Monday, the soaring stockprice of
short-squeezed videogame retailer Gamestop GME.N - are
beginning to worry markets are entering bubble territory.
U.S. lawmakers agreed that getting COVID-19 vaccines to
Americans should be a priority even as they locked horns over
the size of a pandemic relief package. Disagreements have meant months of indecision in a country
suffering more than 175,000 COVID-19 cases a day with millions
out of work.
On Monday, the Nasdaq index .IXIC scaled a new peak but
the Dow Jones Industrial Average index .DJI slipped. .N
"We suspect earnings may not be able to catch up with what
people expect this year," said Jacob Doo, chief investment
officer at Envysion Wealth Management, citing the lockdowns in
Europe and the slow roll-out of vaccines in the United States.
"Within the tech space, we are cautious on FANGS now, simply
because there could be anti-trust laws that Biden would
implement," Doo said.
Focus will also shift to the Federal Reserve's Federal Open
Market Committee meeting on Tuesday and Wednesday.
"We expect the January FOMC to repeat and reinforce the
Fed's existing dovishness, which is still significant given the
recent taper discussions and other central banks' considerations
to adapt policy," Ebrahim Rahbari, FX strategist at CitiFX, said
in a report.
The dollar advanced to a near one-week high against a basket
of currencies, as volatility in stocks sapped investors'
appetite for riskier currencies. The euro dipped to $1.2127.
USD/
Benchmark 10-year U.S. Treasury yields US10YT=RR slipped a
fraction to head back toward Monday's three-week low, last
trading at 1.0381%. US/
Brent crude LCOc1 fell 0.7% to $55.50 per barrel, having
risen nearly 1% on Monday. O/R

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