US and European equity futures declined along with Asian stocks on Tuesday as investors weighed the prospect of central banks tightening policy more than previously expected to tame inflation.
(Bloomberg) — US and European equity futures declined along with Asian stocks on Tuesday as investors weighed the prospect of central banks tightening policy more than previously expected to tame inflation.
Contracts for the S&P 500 and the Nasdaq 100 futures lost more than 0.3%, indicating further downward pressure for US stocks after declines last week. The MSCI Asia Pacific Index slid as much as 0.5% in mixed trading that saw Japanese shares swing between gains and losses while Chinese equities moved firmly lower.
The drop in Chinese shares came after the CSI 300 benchmark posted its best one-day gain since November on Monday, when Goldman Sachs Group Inc. strategists said the nations equities could surge about a fifth from current levels this year.
The dollar ticked higher, advancing against peers in the Group-of-10 currency basket, as Treasury yields climbed in Asia after trading was closed for a US holiday on Monday.
Yield on the policy-sensitive two-year maturity was near the highest since November as traders awaited the release of the PCE deflator, which is Federal Reserve’s preferred measure of inflation, later this week.
“While some will focus on US-China relations and point to upcoming meetings between the Chinese and Russians this week, the repricing and push higher in interest rate expectations will eventually open up the downside in equity markets,” Chris Weston, head of research at Pepperstone Group Ltd., wrote in a note.
Benchmark two-year yields on New Zealand government bonds rose Tuesday while Australian yields ticked higher. Economists expect the Reserve Bank of New Zealand to hike its policy rate by 50 basis points on Wednesday.
Meanwhile, 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.
Elsewhere, trading of oil was choppy as investors weighed the possibility of further monetary tightening against signs of improving demand from China. 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 0.4% as of 12:32 p.m. Tokyo time.
- Nasdaq 100 futures fell 0.3%.
- Japan’s Topix index was little changed
- South Korea’s Kospi index was little changed
- Hong Kong’s Hang Seng Index fell 1.1%
- China’s Shanghai Composite Index was little changed
- Australia’s S&P/ASX 200 Index fell 0.2%
Currencies
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro fell 0.2% to $1.0665
- The Japanese yen fell 0.1% to 134.43 per dollar
- The offshore yuan fell 0.2% to 6.8759 per dollar
- The Australian dollar fell 0.1% to $0.6899
Cryptocurrencies
- Bitcoin rose 0.8% to $24,975.93
- Ether rose 0.4% to $1,707.7
Bonds
- The yield on 10-year Treasuries advanced four basis points to 3.85%
- Japan’s 10-year yield was unchanged at 0.50%
- Australia’s 10-year yield advanced two basis points to 3.83%
Commodities
- West Texas Intermediate crude rose 0.4% to $76.61 a barrel
- Spot gold fell 0.1% to $1,838.93 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Akshay Chinchalkar and Richard Henderson.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.