Asian equity markets are poised for declines after technology stocks led Wall Street lower and bonds rose on data that showed some softening in the labor market, housing and a gauge of business outlook.
(Bloomberg) — Asian equity markets are poised for declines after technology stocks led Wall Street lower and bonds rose on data that showed some softening in the labor market, housing and a gauge of business outlook.
Futures for equity benchmarks in Australia, Japan and Hong Kong all signal markets will open lower Friday. The tech-heavy Nasdaq 100 underperformed, with Tesla Inc. down about 10% after signaling it will keep cutting prices to stoke demand while the S&P 500 dropped ahead of Friday’s options expiration.
Read: Wary Stock Traders Eye Options Deadline for End to Eerie Calm
Meanwhile, wagers are in place for the Bank of Japan to adjust its stance, months after it doubled its yield cap to 0.5% in a surprise move that jolted global markets as Governor Kazuo Ueda gears up for his first policy meeting next week.
The dollar retreated against most of its developed-market peers as traders pared back expectations for Federal Reserve rate hikes after the soft jobless claims and home-sales data. The policy-sensitive two-year yield declined as much as 10 basis points to 4.14%.
However, Fed Bank of Cleveland President Loretta Mester signaled support for another rate hike to quell inflation while flagging the need to watch recent bank stress that could crimp credit and dampen the economy. Her Dallas counterpart Lorie Logan said inflation has been “much too high,” while outlining measures to watch.
Recurring unemployment benefit claims jumped to the highest level since November 2021, adding to signs that the labor market is beginning to lose momentum. Sales of previously owned homes fell in March by more than forecast, underscoring a housing market that’s still on shaky footing despite some signs of stabilizing. US mortgage rates rose for the first time since early March.
“If the Fed stays the course, broad financial conditions should continue to tighten, the economy should decelerate into recession, and stocks should trade down sharply,” wrote Chris Senyek of Wolfe Research. “On the flip side, the biggest upside risk to our bearish call remains the Fed backing off way too soon! Although, if the Fed fails to sustainably bring down inflation, the ultimate pain will likely be much worse 12-24 months down the road.”
In other markets, oil fell the most in more than a month, wiping out almost all of the gains stemming from OPEC+’s surprise output cut on signs of a global economic slowdown. Gold was little changed around the $2,000 an ounce mark.
Corporate Highlights:
- International Business Machines Corp. gave a forecast for annual revenue in line with analysts’ projections, delivering a cautiously optimistic signal about technology spending in an uncertain economy.
- AT&T Inc. missed estimates for free cash flow.
- American Express Co. set aside more money to cover souring loans, a move that weighed on earnings.
- D.R. Horton Inc.’s results topped expectations.
- Truist Financial Corp. and Fifth Third Bancorp. reported deposits that were broadly stable in the first quarter as banks weathered the fallout from the collapse of three lenders in March.
- Union Pacific Corp. posted profit higher than analysts’ expectations amid higher prices.
Key events this week:
- PMIs for Eurozone, Friday
- Japan CPI, Friday
- Fed’s Lisa Cook discusses economic research at an event, Friday
Some of the main moves in the market:
Stocks
- Hang Seng futures fell 0.6% as of 7:05 a.m. Tokyo time
- S&P/ASX 200 futures fell 0.5%
- Nikkei 225 futures fell 0.2%
- S&P 500 futures were little changed; the S&P 500 fell 0.6%
- Nasdag 100 futures rose 0.1%; the Nasdaq 100 fell 0.8%
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro was little changed at $1.0969
- The Japanese yen was unchanged at 134.24 per dollar
- The offshore yuan was little changed at 6.8833 per dollar
- The Australian dollar was unchanged at $0.6743
Cryptocurrencies
- Bitcoin rose 0.3% to $28,290.64
- Ether climbed 0.4% to $1,947.02
Bonds
- The yield on 10-year Treasuries declined six basis points to 3.53%
- Australia’s 10-year yield declined two basis points to 3.49%
Commodities
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from John Viljoen and Robert Brand.
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