Shares in Asia fell for a third day, following losses on Wall Street, while Treasuries extended a selloff as investors digested better-than-expected US labor-market data and prepared for a rush of US government bond issuance next week.
(Bloomberg) — Shares in Asia fell for a third day, following losses on Wall Street, while Treasuries extended a selloff as investors digested better-than-expected US labor-market data and prepared for a rush of US government bond issuance next week.
Equity benchmarks in Japan, Australia, South Korea and Hong Kong all declined, while those in mainland China were little changed. Taiwan’s markets are shut due to the approach of a typhoon.
Evergrande Property Services Group Ltd., a unit of the highly indebted developer, slid by about half in Hong Kong as the company resumed trading for the first time since March 2022. Pressure on China’s property sector weighed on the country’s junk bonds, which fell for a second day. Superconductor-related shares in China also declined after a sharp rally over the past week.
US equity futures were broadly flat in Asia after the S&P 500 slipped 1.4% Wednesday, its worst day since April. The Nasdaq 100 fell 2.2% and Qualcomm Inc. dropped on a tepid revenue forecast. The VIX index, known as Wall Street’s “fear gauge” rose to the highest since May.
“We’re seeing the negative reaction overnight, harking back to the perception that we’re fully valued in the US,” Lucy Meagher, an investment adviser for Evans and Partners Pty in Sydney, said on Bloomberg Television. Investors should consider rotating into small-caps from large-caps and away from US stocks into emerging markets, she said.
Treasuries fell in Asia, after a Wednesday selloff pushed 10-year yields to the highest since November. The selling was helped along by private payrolls data that showed US companies added 324,000 workers last month, beating the consensus forecast of 190,000. Bill Ackman, founder and chief executive officer of Pershing Square Capital Management, said he had shorted 30-year Treasuries, which he described as overbought from a supply and demand perspective.
Rising Issuance
Investors also digested news that the Treasury will issue $103 billion of securities next week, spanning three-, 10- and 30-year debt. The quarterly issuance is up from $96 billion, and slightly more than forecast. The news followed Fitch Ratings’ downgrade of the US on Wednesday.
Japanese 10-year bonds also fell as investors tried to judge how far the Bank of Japan will allow yields to rise under its more flexible yield-curve control regime. The dollar was little changed after a two-day rally in muted currency market trading.
The Bank of England is forecast to raise its benchmark interest rate by 25 basis points to 5.25% later Thursday. Speculation is also growing it will surprise economists by signaling an increase to the pace of bond sales as it looks to reduce its outsized footprint in the market.
PayPal Holdings Inc. said a key measure of profits shrank in the second quarter as the company had to set aside more money to cover souring loans it has made to merchants. Shopify Inc. reported sales and profit for the second quarter that beat analyst expectations.
Investors will be keeping a keen eye on Apple Inc. earnings due Thursday. The iPhone maker is expected to report its third consecutive year-over-year revenue decline. Amazon.com Inc. will also report quarterly results Thursday with investors and analysts closely watching its cloud computing business.
Elsewhere, oil rose after a two-day selloff, gold ticked higher and Bitcoin traded just above $29,000.
Key events this week:
- China Caixin Services PMI, Thursday
- Eurozone S&P Global Eurozone Services PMI, PPI, Thursday
- Bank of England rate decision, Thursday
- US initial jobless claims, productivity, factory orders, ISM Services, Thursday
- Eurozone retail sales, Friday
- US unemployment rate, non-farm payrolls, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 12:57 p.m. Tokyo time. The S&P 500 fell 1.4%
- Nasdaq 100 futures were little changed. The Nasdaq 100 fell 2.2%
- Japan’s Topix fell 1%
- Australia’s S&P/ASX 200 fell 0.5%
- Hong Kong’s Hang Seng fell 0.1%
- The Shanghai Composite fell 0.2%
- Euro Stoxx 50 futures were little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0934
- The Japanese yen was little changed at 143.25 per dollar
- The offshore yuan was little changed at 7.2002 per dollar
- The Australian dollar was little changed at $0.6536
Cryptocurrencies
- Bitcoin rose 0.1% to $29,158.69
- Ether fell 0.1% to $1,839.49
Bonds
- The yield on 10-year Treasuries advanced two basis points to 4.10%
- Japan’s 10-year yield advanced 2.5 basis points to 0.650%
- Australia’s 10-year yield advanced five basis points to 4.07%
Commodities
- West Texas Intermediate crude was little changed
- Spot gold rose 0.1% to $1,937.26 an ounce
This story was produced with the assistance of Bloomberg Automation.
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