Asian equities dropped following tech-led declines on Wall Street as investors looked ahead to a week that includes Federal Reserve and Bank of Japan meetings.
(Bloomberg) — Asian equities dropped following tech-led declines on Wall Street as investors looked ahead to a week that includes Federal Reserve and Bank of Japan meetings.
Stocks slipped in South Korea and Australia at the open. Japanese markets are shut for a holiday, with the central bank due to meet later this week. Contracts for US shares edged higher at the start of Asian hours.
Stocks fell in the US Friday, with a $4 trillion options maturity amplifying volatility, pushing up the equity-volatility VIX gauge from its lowest level since 2020. Big tech losses were led by Nvidia Corp. and Meta Platforms Inc. which both fell more than 3.5%. The S&P 500 erased its weekly gain, while the Nasdaq 100 slid 1.8%. The Fed’s policy decision is scheduled for Wednesday.
Oil gained for a third day, with Brent trading at around $94 per barrel. Traders will be watching Saudi Energy Minister Prince Abdulaziz bin Salman, who is due to address an industry conference on the kingdom’s crude policy and outlook on Monday.
Meanwhile, piles of derivatives contracts tied to stocks, index options and futures expired Friday — compelling traders to roll over their existing positions or to start new ones. This time, it coincided with the rebalancing of benchmark indexes including the S&P 500, another catalyst for more share transactions.
There is no cash trading of Treasuries in Asian hours Monday with Japan shut for a holiday. Treasury futures were little changed after yields rose Friday, with the rate-sensitive two-year rate closing above 5%. The greenback weakened against most of its G-10 peers while the Australian dollar and yen traded within narrow ranges.
In Asia, distressed Chinese developer Country Garden Holdings Co. faces more tests Monday including a vote on stretching payment of a local bond by three years. Meanwhile, union workers at Chevron Corp.’s liquefied natural gas facilities in Western Australia continued rolling 24-hour stoppages for a second day, prolonging uncertainty over global supply of the fuel.
‘Sufficiently Hawkish’
US inflation expectations fell to the lowest in more than two years as consumers grew more optimistic about the economic outlook, data showed Friday. A measure of New York state factory activity unexpectedly expanded amid new orders.
A resilient US economy will prompt the Fed to pencil in one more interest-rate hike this year and stay at the peak level next year for longer than previously expected, according to economists surveyed by Bloomberg News.
“The Fed will be sufficiently hawkish so that markets don’t think it is done hiking,” said Win Thin, global head of currency strategy at Brown Brothers Harriman & Co., referring to this week’s US policy decision. Inflation continues to be elevated, the economy is still growing above trend and the labor market remains extremely tight so “simply put, current conditions warrant further tightening, period,” he said.
Key events this week:
- Apple expected to release the iPhone’s latest operating system, iOS 17, Monday
- Reserve Bank of Australia issues minutes of September’s policy meeting, Tuesday
- OECD releases interim economic outlook report on the global economy, Tuesday
- Eurozone CPI, Tuesday
- Bloomberg Future of Finance Conference in Frankfurt, with speakers to include German Finance Minister Christian Lindner, Tuesday
- ECB Executive Board member Frank Elderson speaks, Tuesday
- Bank of Canada Deputy Governor Sharon Kozicki speaks, Tuesday
- Japan trade, Wednesday
- China loan prime rates, Wednesday
- UK CPI, Wednesday
- Federal Reserve policy meeting, followed by Chair Jerome Powell’s news conference, Wednesday
- Bank of Canada issues summary of September’s policy meeting, Wednesday
- Bank of England policy meeting, Thursday
- ECB Executive Board member Isabel Schnabel chairs panel, Thursday
- ECB chief economist Philip Lane speaks, Thursday
- Japan CPI, PMIs, Friday
- Bank of Japan rate decision, Friday
- Australia PMIs, Friday
- China’s Bund Summit, Friday
- Eurozone S&P Global Eurozone PMIs, Friday
- UK S&P Global / CIPS UK Manufacturing PMI, Friday
- ECB Vice President Luis de Guindos speaks, Friday
- US S&P Global Manufacturing PMI, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.2% as of 9:07 a.m. Tokyo time. The S&P 500 fell 1.2% on Friday
- Nasdaq 100 futures rose 0.2%. The Nasdaq 100 fell 1.8%
- Australia’s S&P/ASX 200 Index fell 0.1%
- Hong Kong’s Hang Seng futures fell 0.6%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.1% to $1.0671
- The Japanese yen was little changed at 147.82 per dollar
- The offshore yuan was little changed at 7.2737 per dollar
- The Australian dollar rose 0.2% to $0.6442
Cryptocurrencies
- Bitcoin rose 0.4% to $26,546.14
- Ether rose 0.4% to $1,624.31
Bonds
- Australia’s 10-year yield advanced six basis points to 4.17%
Commodities
- West Texas Intermediate crude rose 0.2% to $90.95 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
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