Equities in Asia were mixed Monday after heavy selling on Wall Street late last week as investors ratcheted up forecasts for US interest rates following hot inflation data.
(Bloomberg) — Equities in Asia were mixed Monday after heavy selling on Wall Street late last week as investors ratcheted up forecasts for US interest rates following hot inflation data.
Shares dropped in Australia and South Korea while fluctuating in China and Japan. Hong Kong’s Hang Seng Index initially looked on course to erase its advance for 2023 before swinging marginally higher, helped along by a jump of as much as 20% in shares of Haidilao International Holding Ltd. following an upbeat profit forecast.
US futures ticked higher, taking the edge off Friday’s slump of more than 1% for the S&P 500 and Nasdaq 100, which each suffered their worst week since December.
Investor jitters over riskier assets follows an unexpected acceleration in January of the personal consumption expenditures price index, the Federal Reserve’s favored inflation gauge. The PCE data release Friday prompted a swift repricing of interest rate forecasts, with traders now pricing US rates to peak at 5.4% this year, compared to a expectations held just a month ago of rates to peak at less than 5%.
“It seems premature to call a turnaround in risk this week,” Chris Weston, head of research for Pepperstone Group Ltd., in a Monday note. “The clouds of uncertainty remain with us – the market’s consensus view that inflation would head lower through the year has clearly been challenged.”
The yen strengthened against the dollar after a sharp fall on Friday. Bank of Japan Governor nominee Kazuo Ueda is speaking again in the Japanese parliament Monday. Inflation data released last week showed prices in the nation were rising at the fastest pace in four decades, placing pressure on the central bank to reassess its loose policy settings.
Yield on the 10-year Treasury dipped by one basis point in Asia on Monday after a jump of seven basis points Friday. Elevated yields continued to support the dollar, with a gauge of greenback marginally lower after rising 0.7% Friday.
The Australian 10-year yield rose seven points while the New Zealand 10-year yield climbed three basis points and was near the highest level since November.
Data due later in the day will provided extra context for the global economic outlook. Eurozone economic and consumer confidence is due, along with durable goods data from the the US.
On the geopolitical front, the US will impose a 200% tariff on all imports of Russian-made aluminum, as well as aluminum products made with metal smelted or cast in the country, in a move that could ripple through global manufacturing supply chains.
Late last week, Treasury Secretary Janet Yellen warned China and other nations against providing material support to Russia, saying any such actions would amount to an evasion of sanctions and would “provoke very serious consequences.”
Key events this week:
- Eurozone economic confidence, consumer confidence, Monday
- US durable goods, Monday
- US wholesale inventories, Conf. Board consumer confidence, Tuesday
- China manufacturing PMI, non-manufacturing PMI, Caixin manufacturing PMI, Wednesday
- Eurozone S&P Global Eurozone Manufacturing PMI, Wednesday
- US construction spending, ISM Manufacturing, light vehicle sales, Wednesday
- Eurozone CPI, unemployment, Thursday
- US initial jobless claims, Thursday
- Eurozone S&P Global Eurozone Services PMI, PPI, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.2% as of 11:50 a.m. Tokyo time
- Nasdaq 100 futures rose 0.3%
- Japan’s Topix was little changed
- Australia’s S&P/ASX 200 fell 1.2%
- Hong Kong’s Hang Seng was little changed
- The Shanghai Composite rose 0.1%
- Euro Stoxx 50 futures rose 0.3%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0555
- The Japanese yen rose 0.3% to 136.13 per dollar
- The offshore yuan was little changed at 6.9762 per dollar
Cryptocurrencies
- Bitcoin was little changed at $23,556.13
- Ether fell 0.1% to $1,640.75
Bonds
- The yield on 10-year Treasuries was little changed at 3.94%
- Australia’s 10-year yield advanced seven basis points to 3.89%
Commodities
- West Texas Intermediate crude rose 0.1% to $76.40 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Akshay Chinchalkar.
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