Stocks in Asia are poised to follow the sharpest decline in US equities in two weeks after a rout in bank shares picked up steam on concerns pockets of trouble in the sector could portend broader dangers. Treasuries rallied.
(Bloomberg) — Stocks in Asia are poised to follow the sharpest decline in US equities in two weeks after a rout in bank shares picked up steam on concerns pockets of trouble in the sector could portend broader dangers. Treasuries rallied.
Equity futures for Australia, Japan and Hong Kong all pointed to drops of more than 1%. The S&P 500 on Thursday fell to the lowest since Jan. 19, with financial companies in the index plunging. Banks came under fire after the collapse of Silvergate Capital Corp. amid growing scrutiny in Washington. Silicon Valley-based lender SVB Financial Group lost 60% after taking steps to shore up its capital position, stoking concern that soaring interest rates are eroding balance sheets.
“Everybody has been concerned that higher interest rates will lead to higher defaults at some point in 2023, and this raises those questions even more,” said Matt Maley, chief market strategist at Miller Tabak + Co.
Cryptocurrencies slid, with Bitcoin on Thursday falling the most since November amid Silvergate’s meltdown.
US stocks gained early in the session Thursday after data showed weekly jobless claims had risen to 211,000 during the week ending March 4, ahead of expectations for 195,000 and marking the first time claims surpassed 200,000 since early January.
“This is a tiny glimmer of hope that maybe the US labor market isn’t quite as tight as the other data points are saying,” Fiona Cincotta, senior financial markets analyst at City Index, said by phone. “This is a preshow before the main event.”
The numbers set the stage for Friday’s monthly jobs report, with even just slightly stronger-than-forecast figures expected to cement bets for a bigger hike at the March 21-22 Fed meeting. Economists project a 225,000 increase in February payrolls, about half January’s blockbuster pace, but a figure in that range would confirm the US economy continues to add jobs at a strong rate.
A softer-than expected number could soften wagers on a half-point move in March, and tilt expectations back to a quarter-point hike.
Two-year yields’ premium over their 10-year equivalent narrowed to around 97 basis points, having surpassed 110 basis points earlier this week. The inversion is considered a reliable recession harbinger.
The yen led the charge higher among major developed currencies, gaining the most in a month on Thursday, in the lead up to Bank of Japan chief Haruhiko Kuroda’s final policy announcement. The central bank is leaning toward monitoring the impact of recent tweaks to its stimulus program rather than making another adjustment, according to people familiar with the matter.
Key events this week:
- Bank of Japan policy rate decision, Friday
- US nonfarm payrolls, unemployment rate, monthly budget statement, Friday
Some of the main moves in markets as of 7:31 a.m. Tokyo time:
Stocks
- Hang Seng futures fell 1.3%
- S&P/ASX 200 futures fell 1.1%
- Nikkei 225 futures fell 1.3%
- The S&P 500 fell 1.8% on Thursday
- The Nasdaq 100 fell 1.8%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0584
- The Japanese yen was unchanged at 136.15 per dollar
- The offshore yuan was little changed at 6.9772 per dollar
Cryptocurrencies
- Bitcoin rose 0.5% to $20,323.64
- Ether rose 0.4% to $1,438.28
Bonds
- The yield on 10-year Treasuries declined nine basis points to 3.90%
- Australia’s 10-year yield declined six basis points to 3.65%
Commodities
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Isabelle Lee, Peyton Forte and Vildana Hajric.
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