Asian stocks opened mixed Friday amid elevated bond yields following a spate on central bank rate hikes.
(Bloomberg) — Asian stocks opened mixed Friday amid elevated bond yields following a spate on central bank rate hikes.
Japanese shares extended gains that have taken them to highest level since 1990 while Australian shares slid and South Korea’s benchmark fluctuated as global index provider MSCI Inc. once again thwarted the nation’s bid for an upgrade to developed-market status.
Hong Kong is set to play catch-up as trading resumes following a holiday, while mainland markets remain shut. The Nasdaq Golden Dragon China index of US-listed shares ended marginally in the red.
Treasury two-year yields hovered just below 4.8% after touching the highest since March on Thursday as Federal Reserve Chair Jerome Powell said the US may need one or two more rate increases in 2023.
Rate hikes from policymakers in England, Norway and Switzerland underscored the upward pressure on bond yields. The yields on Australian and Japanese 10-year bonds rose Friday.
Read More: Global Inflation Alarm Augurs a Long Hot Summer of Rate Hikes
US equity futures were little changed early Friday after the S&P 500 snapped a three-day slide Thursday.
Treasury Secretary Janet Yellen said she sees diminishing risk for the US to fall into recession, and suggested that a slowdown in consumer spending may be the price to pay for finishing the campaign to contain inflation.
There are signs of low conviction in the S&P 500’s rally this year, with the index set to end its longest weekly winning streak since 2021. Bank of America Corp.’s latest survey shows a net 25% of global money managers are still underweight US equities, despite a recent improvement in allocation.
Kristina Hooper, chief global market strategist at Invesco, said if the Federal Reserve does tighten two more times this year, it risks sending the economy into a “significant recession.”
“There is a lengthy lag between when monetary policy is implemented and when it actually shows up in the real economy data,” Hooper said. “We haven’t seen much of an impact yet because of that lag. That’s why we have to worry so much about overkill.”
In currency markets, traders kept a wary eye on the yen, which has weakened to levels that could draw verbal intervention from authorities in Tokyo. It was little changed in early Asia trading Friday after inflation data that was slightly stronger than expected.
In commodities, oil steadied after erasing all of this week’s gains on Thursday as worries about high interest rates rattled investors, overshadowing a drop in US crude inventories. Gold was set for its biggest weekly drop since early February.
Key events this week:
- Eurozone S&P Global Eurozone Manufacturing PMI, S&P Global Eurozone Services PMI, Friday
- US S&P Global Manufacturing PMI, Friday
- Fed Bank of St. Louis President James Bullard speaks, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 9:27 a.m. Tokyo time. The S&P 500 rose 0.4%
- Nasdaq 100 futures were little changed. The Nasdaq 100 rose 1.2%
- Japan’s Topix rose 0.3%
- Australia’s S&P/ASX 200 fell 0.5%
- Euro Stoxx 50 futures were little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0954
- The Japanese yen was little changed at 143.09 per dollar
- The offshore yuan was little changed at 7.1961 per dollar
- The Australian dollar rose 0.1% to $0.6764
Cryptocurrencies
- Bitcoin fell 0.4% to $30,038.15
- Ether fell 0.5% to $1,879.21
Bonds
- The yield on 10-year Treasuries declined one basis point to 3.78%
- Japan’s 10-year yield rose 0.5 basis point to 0.375%
- Australia’s 10-year yield advanced three basis points to 4.01%
Commodities
- West Texas Intermediate crude fell 0.1% to $69.42 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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