Equity markets in Asia fell after US stocks halted a four-day winning streak amid a selloff in banks.
(Bloomberg) — Equity markets in Asia fell after US stocks halted a four-day winning streak amid a selloff in banks.
Shares dropped more than 0.7% in Japan while Australian stocks were little changed. Contracts for US benchmarks steadied Wednesday after the S&P 500 Index dropped 0.6% a day earlier. Markets in Hong Kong and mainland China are closed for a holiday.
The dollar weakened against most Group-of-10 currencies, with the yen and the Aussie leading the gains.
Australian bonds rose, sending the 10-year yield down five basis points, following gains in Treasuries. The US two-year yield, the more sensitive to changes in monetary policy, was little changed after declining as much as 14 basis points on Tuesday as data showing a drop in job openings bolstered bets the Federal Reserve is about to wrap up its tightening campaign.
Swap contracts downgraded the odds of a quarter-point rate hike at the Fed’s May meeting to about 50% from closer to 60%.
“The bond market may indeed be right that the Fed not just pauses, but pivots to rate cuts, but the circumstances that would drive that would not be great, certainly not for the equity market,” Liz Ann Sonders, chief investment strategist at Charles Schwab & Co., Inc., said on Bloomberg Television.
Banks came under renewed pressure Tuesday, with a gauge of financial heavyweights in the US falling the most in almost two weeks. In a wide-ranging annual letter to shareholders, JPMorgan Chase & Co.’s chief Jamie Dimon warned the US banking crisis that sent markets careening last month will be felt for years.
“I think Jamie is correct in the sense that this may not be the last shoe to drop,” Amy Kong, chief investment officer at Barrett Asset Management, said on Bloomberg Television. “There will be broader ramifications to stock market prices as well as earnings.”
Vacancies at US employers sank in February to the lowest since May 2021, the Labor Department’s Job Openings and Labor Turnover Survey showed Tuesday. The reading was below all estimates in a Bloomberg survey.
Reserve Bank of Australia Governor Philip Lowe is scheduled to speak Wednesday, after saying in yesterday’s statement that the RBA expects “some further tightening of monetary policy may well be needed.” The wording, however, suggested a toning down of the tightening bias.
The Reserve Bank of New Zealand will be center stage Wednesday. Policymakers are expected to raise rates by 25 basis points to 5%, down from a 50-point increase in February and a jumbo 75-point hike at the end of last year. A further deceleration may indicate the bank no longer expects to reach a peak of 5.5%.
Elsewhere, in oil markets West Texas intermediate breached $81 a barrel. Bitcoin trended above the high end of its recent range of around $28,000.
Key events this week:
- Eurozone S&P Global Eurozone Services PMI, Wednesday
- US ADP employment change, Wednesday
- US trade, Wednesday
- US initial jobless claims, Thursday
- St. Louis Fed President James Bullard speaks, Thursday
- US unemployment, nonfarm payrolls, Friday
- Good Friday. US stock markets closed, bond markets close for part of the day
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.1% as of 9:04 a.m. Tokyo time. The S&P 500 fell 0.6%
- Nasdaq 100 futures rose 0.2%. The Nasdaq 100 fell 0.4%
- Japan’s Topix index fell 0.9%
- Australia’s S&P/ASX 200 Index fell 0.1%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0962
- The Japanese yen rose 0.3% to 131.34 per dollar
- The Australian dollar rose 0.1% to $0.6761
Cryptocurrencies
- Bitcoin fell 0.3% to $28,167.99
- Ether fell 0.5% to $1,869.2
Bonds
- The yield on 10-year Treasuries was little changed at 3.34%
- Australia’s 10-year yield declined four basis points to 3.22%
Commodities
- West Texas Intermediate crude rose 0.4% to $81 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rita Nazareth.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.