Stocks in Asia headed for declines Friday after US equities fell for a second day and Treasury yields climbed as investors began to adjust for the prospect of higher interest rates as the Federal Reserve battles inflation.
(Bloomberg) — Stocks in Asia headed for declines Friday after US equities fell for a second day and Treasury yields climbed as investors began to adjust for the prospect of higher interest rates as the Federal Reserve battles inflation.
Shares dropped in South Korea and Australia, while futures for Hong Kong stocks declined. The picture was different in Japan, with the Topix index and the Nikkei 225 posting small gains. The S&P 500 fell 0.9% on Thursday, reversing gains of almost 1%. The Nasdaq 100 fell by a similar margin and faces its first weekly decline this year.
Treasury yields continued their climbs across the curve on Friday, after investors pushed yields on the two-year Treasury above the 10-year’s by the most since the early 1980s, a sign of flagging confidence in the economy’s ability to withstand additional Fed hikes. Australian and New Zealand bond yields also rose in early trading in Asia.
Next week’s inflation update from the US offers a relevant potential inflection point in the Treasury yield curve, according to BMO strategists Benjamin Jeffery and Ian Lyngen. “Our expectations are that the market takes away sufficient angst regarding the prevailing inflation trend to press the inversion trade even further,” they wrote in a note.
Market pricing for US rates to peak in July inched higher as investors digested the fresh data and the drumbeat of central bankers signposting further tightening ahead. Fed Bank of Richmond President Thomas Barkin said it’s important to continue hiking to rein in inflation. His comments echoed sentiment from four Fed officials who spoke Wednesday.
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The yen and an index of the dollar steadied. Investors will be watching Chinese inflation data due today for signs of a pickup fueled by the first unrestrained Lunar New Year celebrations since 2019.
Lyft Inc. shares tumbled about 30% in after-hours trading following an earnings outlook that significantly missed analysts’ estimates as it prepares to sacrifice profits in a bid to attract riders with lower prices. In the regular session, Tesla Inc. extended a rally that has pushed the electric-vehicle maker’s stock price up about two-thirds this year. Alphabet Inc. shares fell further on concerns about its artificial intelligence chat bot unveiled earlier this month.
Bitcoin remained on the back foot after falling 4.8% Thursday, the biggest one-day decline since November, amid speculation about a regulatory crackdown.
Key events:
- US University of Michigan consumer sentiment, Friday
- Fed’s Christopher Waller and Patrick Harker speak, Friday
Here are some of the main market moves:
Stocks
- S&P 500 futures were little changed as of 9:13 a.m. Tokyo time. The S&P 500 fell 0.9%
- Nasdaq 100 futures were little changed. The Nasdaq 100 fell 0.9%
- Japan’s Topix index was little changed
- South Korea’s Kospi index fell 0.5%
- Australia’s S&P/ASX 200 Index fell 0.6%
- Hong Kong’s Hang Seng futures fell 0.3%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0735
- The yen was little changed at 131.66 per dollar
- The offshore yuan was little changed at 6.7958 per dollar
Cryptocurrencies
- Bitcoin was little changed at $21,848.4
- Ether rose 0.5% to $1,548.51
Bonds
- The yield on 10-year Treasuries advanced one basis point to 3.67%
- Australia’s 10-year yield advanced seven basis points to 3.74%
Commodities
- West Texas Intermediate crude fell 0.5% to $77.66 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
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