Asian stocks slid Friday after a technology-driven rally on Wall Street failed to ease the malaise hanging over the banking sector. The dollar inched higher after weakening in the previous six sessions.
(Bloomberg) — Asian stocks slid Friday after a technology-driven rally on Wall Street failed to ease the malaise hanging over the banking sector. The dollar inched higher after weakening in the previous six sessions.
Stocks fell Japan, South Korea and Australia, while futures for Hong Kong also pointed lower. This came after traders in the US piled into top technology companies including Apple Inc. and Microsoft Corp. to push the Nasdaq 100 close to the threshold of a bull market after an almost 20% surge from its December low.
But banking stocks missed out on the rally, with a gauge of US financial heavyweights such as Wells Fargo & Co. and Bank of America Corp. sinking to the lowest since November 2020. The lenders slumped even after Treasury Secretary Janet Yellen told lawmakers the US would be prepared for further steps to protect deposits if needed.
Government bond yields in Asia opened lower, with drops of less than 5 basis points in Australia and New Zealand. That followed outsized moves in short-dated Treasuries for an 11th straight trading day as investors pessimistic about the economic outlook cemented their view that the Fed will need to slash interest rates later this year. Treasuries were little changed at the open Friday.
The yen was steady and benchmark 10-year Japanese bonds were untraded after the nation’s inflation slowed for the first time in 13 months. Still, gains in prices excluding fresh food and energy suggest stronger underlying inflationary pressures. This could stoke market speculation that incoming BOJ Governor Kazuo Ueda may have to move toward policy normalization sooner rather than later.
A gauge of dollar strength clawed back a loss Thursday as the risk tone soured following the drop in US bank shares but still ended down for a sixth session — its longest losing streak since April 2021. It was little changed in early trading on Friday.
“The push-and-pull between financial market stability and inflation that is receding more slowly than anyone would prefer will further complicate an already significant challenge for the Fed, increasing the risk of a policy misstep and keeping the door open for a potential recession on the horizon,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors.
Comments by Yellen about additional deposit actions, if warranted, offered investors comfort while they digested earlier rate hikes by the Bank of England, Norges Bank and Swiss National Bank and hawkish comments by European Central Bank officials.
Key events this week:
- Eurozone S&P Global Eurozone Manufacturing PMI, S&P Global Eurozone Services PMI, Friday
- US durable goods, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.1% as of 9:09 a.m. Tokyo time. The S&P 500 rose 0.3%
- Nasdaq 100 futures were little changed. The Nasdaq 100 rose 1.3%
- Australia’s S&P/ASX 200 fell 0.5%
- Hang Seng futures fell 0.8%
- Japan’s Topix fell 0.5%
- South Korea’s Kospi fell 0.4%
Currencies
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro was little changed at $1.0825
- The Japanese yen was little changed at 130.87 per dollar
- The offshore yuan was little changed at 6.8359 per dollar
- The Australian dollar fell 0.1% to $0.6674
Cryptocurrencies
- Bitcoin rose 0.1% to $28,367.77
- Ether was little changed at $1,818.49
Bonds
- The yield on 10-year Treasuries was little changed at 3.42%
- Australia’s 10-year yield declined two basis points to 3.27%
Commodities
- West Texas Intermediate crude fell 0.7% to $69.46 a barrel
- Spot gold fell 0.2% to $1,990.36 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rita Nazareth.
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