Stocks in Asia fluctuated at the open Tuesday and US equity futures fell as investors weighed the prospect that central banks will have to tighten policy settings more than previously expected to tame inflation.
(Bloomberg) — Stocks in Asia fluctuated at the open Tuesday and US equity futures fell as investors weighed the prospect that central banks will have to tighten policy settings more than previously expected to tame inflation.
Australian shares fell while benchmarks in Japan and South Korea swung between gain and losses, and futures for Hong Kong stocks edged moderately higher. Contracts for the S&P 500 fell, indicating further downward pressure for US stocks after declines last week.
The dollar was little changed, extending a run of range-bound trading over the past week. Treasury yields advanced across tenors in early Asia time after trading was closed for a US holiday on Monday.
Ed Yardeni, chief investment strategist of his eponymous research firm, placed a 40% chance of a soft landing for the US economy, the highest odds among four potential scenarios facing markets this year.
“We see the greatest odds of a soft landing in which inflation moderates, the Treasury bond remains below last year’s peak, and the S&P 500 ends the year at a new high,” he said in a Tuesday note.
Economic data that has come out so far “certainly puts a lot of cold water” on the argument that the Federal Reserve may pause or even cut rates soon, Chuck Cumello, president and chief executive officer of Essex Financial Services, said on Bloomberg Radio. “We’re in for a more volatile ride and I think the market is finally waking up to rates are going to stay higher for longer,” he said.
Benchmark two-year yields on New Zealand government bonds rose in early trading Tuesday while Australian yields edged slightly higher. Economists expect the Reserve Bank of New Zealand to hike its policy rate by 50 basis points on Wednesday. The New Zealand dollar was slightly lower as the country assesses the damage of a destructive cyclone.
The Australian dollar steadied after gaining 0.5% against the greenback Monday, helped along by a further gain for the price of iron ore, which is at the highest level since June.
BHP Group Ltd. shares slumped more than 2% after the miner slashed its dividend following rising costs and weaker commodity prices, partly reflecting the chill caused by China’s now softened Covid-Zero policy.
Investors will be keeping a close eye on mainland China stocks after the CSI 300 benchmark posted its best one-day gain since November. Goldman Sachs Group Inc. strategists said in a research note Monday prior to the start of trading that the benchmark could surge more than a fifth from current levels this year.
Elsewhere, oil rose on continuing hopes that China’s reopening will spur activity. Gold was little changed.
Key events this week:
- Earnings for the week are scheduled to include: Alibaba, Anglo American, AXA, BAE Systems, Baidu, BASF, Danone, Deutsche Telekom, Holcim, Home Depot, Hong Kong Exchanges & Clearing, HSBC, Iberdrola, Lloyds Banking Group, Moderna, Munich Re, Newmont, Nvidia, Rio Tinto, Walmart, Warner Bros Discovery
- PMIs for Japan, Eurozone, UK, US, Tuesday
- US existing home sales, Tuesday
- US MBA mortgage applications, Wednesday
- The Federal Reserve minutes from Jan. 31-Feb. 1 policy meeting, Wednesday
- Eurozone CPI, Thursday
- US GDP, initial jobless claims, Thursday
- Atlanta Fed President Raphael Bostic speaks, Thursday
- G-20 finance ministers and central bank governors meet in India, Thursday-Friday
- Japan CPI, Friday
- BOJ governor-nominee Kazuo Ueda appears before Japan’s lower house, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.3% as of 9:29 a.m. Tokyo time.
- Nasdaq 100 futures fell 0.2%
- Japan’s Topix index rose 0.1%
- South Korea’s Kospi index rose 0.2%
- Australia’s S&P/ASX 200 Index fell 0.5%
- Hong Kong’s Hang Seng futures rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0681
- The Japanese yen fell 0.1% to 134.40 per dollar
- The offshore yuan was little changed at 6.8619 per dollar
- The Australian dollar was little changed at $0.6904
Cryptocurrencies
- Bitcoin rose 0.2% to $24,815.92
- Ether was little changed at $1,700.53
Bonds
- The yield on 10-year Treasuries advanced three basis points to 3.85%
- Australia’s 10-year yield advanced three basis points to 3.84%
Commodities
- West Texas Intermediate crude rose 1% to $77.07 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
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