Asian stocks opened mixed as trading resumed in most of the region’s markets following a holiday on Monday. Investors are weighing JPMorgan Chase & Co.’s purchase of First Republic Bank along with expectations the Federal Reserve will hike interest rates once again this week.
(Bloomberg) — Asian stocks opened mixed as trading resumed in most of the region’s markets following a holiday on Monday. Investors are weighing JPMorgan Chase & Co.’s purchase of First Republic Bank along with expectations the Federal Reserve will hike interest rates once again this week.
Stocks fluctuated in Japan and were down in Australia. Futures for Hong Kong signaled the shares may open little changed. While China will stay closed until Thursday, concerns remain about its economy’s patchy emergence from the pandemic lockdowns. The latest indicators point to a contraction in manufacturing, while consumers splurge over the holidays and the housing market continues to rebound.
The dollar was steady and Treasuries were little changed in early Asia trading after selling off across the curve Monday, with yields on 30-year bonds climbing the most in 2023 and those on 10-year notes approaching 3.60%. Swap traders have slightly upgraded the odds the Fed will raise its policy rate by a quarter point Wednesday.
Australian bonds fell while traders awaited a policy decision where the nation’s central bank is likely to extend a pause in rate increases following a deceleration in inflation.
Meanwhile, US Treasury Secretary Janet Yellen issued a dire warning by telling lawmakers on Monday that the nation risked default as soon as June 1. That came amid a high-stakes game of chicken in Washington over the debt limit.
“As a market participant, we don’t really need any more ups and downs caused by things outside of the market itself and earnings,” Kim Forrest, chief investment officer at Bokeh Capital Partners, said on Bloomberg Radio. “Everyone on both sides of the aisle should listen to her,” the Pennsylvania-based Forrest said, referring to Yellen.
In the US investment-grade bond market, issuance jumped to more than $22 billion in one of the busiest sessions of 2023. Several borrowers are piling in after exiting their earnings blackouts. Among notable firms tapping the market: Meta Platforms Inc. raised $8.5 billion, Comcast Corp. priced a $5 billion deal and Hershey Co. sold $750 million in bonds.
Rising corporate bond offerings in the US usually represent a double-whammy for Treasuries, which tend to fall amid competition from new debt and as underwriters sell government notes to rate-lock the issue for corporate buyers. Another factor weighing on bond prices Monday was the stabilization in sentiment after JPMorgan acquired First Republic.
Elsewhere, oil held a loss as concerns over China’s economic outlook and caution in financial markets dominated sentiment. Gold was little changed.
Key events this week:
- RBA rate decision, Tuesday
- US JOLTS job openings, factory and durable goods orders, Tuesday
- ADP employment, S&P global US services PMI, ISM services, Wednesday
- Fed Chair Jerome Powell holds news conference following rate decision, Wednesday
- US initial jobless claims, trade balance, Thursday
- European Central Bank rate decision, followed by ECB President Christine Lagarde’s news conference, Thursday
- US unemployment, nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.1% as of 9:08 a.m. Tokyo time. The S&P 500 was little changed
- Nasdaq 100 futures fell 0.1%. The Nasdaq 100 fell 0.1%
- Japan’s Topix index rose 0.1%
- Australia’s S&P/ASX 200 index fell 0.2%
- Hong Kong’s Hang Seng futures were unchanged
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was unchanged at $1.0976
- The Japanese yen was little changed at 137.40 per dollar
- The offshore yuan was little changed at 6.9599 per dollar
- The Australian dollar was unchanged at $0.6630
Cryptocurrencies
- Bitcoin rose 1.2% to $28,025.97
- Ether rose 1.3% to $1,830.27
Bonds
- The yield on 10-year Treasuries was little changed at 3.56%
- Australia’s 10-year yield advanced seven basis points to 3.42%
Commodities
- West Texas Intermediate crude was little changed
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
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