Asian stocks fell Wednesday after momentum in US equities faded and Congress considered the debt accord that’s needed to head off a catastrophic default.
(Bloomberg) — Asian stocks fell Wednesday after momentum in US equities faded and Congress considered the debt accord that’s needed to head off a catastrophic default.
Shares slipped in Japan and Australia, while contracts for Hong Kong earlier fell more than 1%. Purchasing manager index data for China will be watched for any signs of change in the economy’s wobbly recovery, which has weighed on its share markets and currency.
South Korea’s Kospi benchmark bucked the downbeat sentiment as it headed for a bull market, boosted by purchases by foreign investors in chipmakers and the electric-vehicle supply chain.
Futures on the S&P 500 and the Nasdaq 100 were little changed. Energy companies on Tuesday dragged on the S&P 500 as oil sank below $70 a barrel. Oil remained below the $70 level in early Asian hours.
The Nasdaq 100 added 0.4% Tuesday to extend this year’s surge to 31%, while ending off its high for the day as investors assessed the artificial-intelligence hype that’s boosted the index. Nvidia Corp. hovered near $1 trillion in value after announcing several AI-related products.
Major currencies were little changed in early Asian trading after a gauge of the dollar edged lower amid declines in Treasury yields.
The yen weakened slightly after gains Tuesday that were spurred by Japan’s top currency official warned that Tokyo would take necessary action to support the yen.
Data this morning showed Japan’s industrial output contracted in April for the first time in three months and retail sales fell for the first time in five months, a potential drag on the nation’s markets.
Treasuries steadied after yields fell Tuesday from the highest levels since March that reflected hopes the Congress will pass the debt deal. Treasury rates on 3- to 10-year maturities led the move Tuesday.
The two-year yield, more sensitive than longer maturities to the outlook for Federal Reserve policy, traded around 4.46% Wednesday. Yields on benchmark 10-year government bonds in Australia and New Zealand fell about five basis points.
The House Rules Committee meets soon to decide whether the debt limit bill will get a full vote. Two far-right Republicans on the panel oppose it. House passage on Wednesday is critical to getting approval in the Senate — where there’s also GOP resistance — by the Monday deadline.
Fed Bank of Richmond President Thomas Barkin said he is looking for signs that demand is cooling to be convinced that US inflation will ease.
“More likely than not the Fed will continue to tighten and that is going to lead to a recession,” Shana Sissel, Chicago-based founder and president of Banrion Capital Management, said on Bloomberg Television. “It’s going to take time before we start to see the real impact of the Fed policy on the system.”
Traders also kept an eye on the latest economic reports, with US consumer confidence dropping to a six-month low as views about the labor market and the outlook for business conditions slipped ahead of a deal to raise the debt ceiling.
Key events this week:
- China manufacturing PMI, non-manufacturing PMI, Wednesday
- US job openings, Wednesday
- Federal Reserve’s Beige Book, Wednesday
- Fed’s Patrick Harker, Susan Collins and Michelle Bowman speak at events, Wednesday
- China Caixin manufacturing PMI, Thursday
- Eurozone HCOB Eurozone Manufacturing PMI, CPI, unemployment, Thursday
- US construction spending, initial jobless claims, ISM Manufacturing, Thursday
- ECB President Christine Lagarde speaks at conference, Thursday
- Fed’s Patrick Harker speaks at webinar, Thursday
- US unemployment, nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 9:24 a.m. Tokyo time. The S&P 500 was little changed Tuesday
- Nasdaq 100 futures rose 0.1%. The Nasdaq 100 rose 0.4%
- Japan’s Topix index fell 0.9%
- Australia’s S&P/ASX 200 Index fell 0.7%
- Hong Kong’s Hang Seng futures fell 1.3%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0731
- The Japanese yen was little changed at 139.86 per dollar
- The offshore yuan was little changed at 7.0926 per dollar
- The Australian dollar was little changed at $0.6515
Cryptocurrencies
- Bitcoin fell 0.2% to $27,707.75
- Ether fell 0.1% to $1,901.74
Bonds
- The yield on 10-year Treasuries was little changed at 3.69%
- Australia’s 10-year yield declined six basis points to 3.63%
Commodities
- West Texas Intermediate crude rose 0.2% to $69.58 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rita Nazareth.
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