US stock futures fell in Asian trade while equities across the region were mixed as investors weighed signs of progress in talks to avert a debt default and persistent inflationary pressure.
(Bloomberg) — US stock futures fell in Asian trade while equities across the region were mixed as investors weighed signs of progress in talks to avert a debt default and persistent inflationary pressure.
Japanese shares gained, with the Topix index nearing the highest level since 1990. Benchmarks in Australia, South Korea, and mainland China all dropped and Hong Kong’s fluctuated. The dollar weakened versus most of its Group-of-10 peers, while Treasuries were little changed.
China kept its medium-term lending facility at 2.75%, as economists had forecast, while injecting more long-term liquidity into the financial system for the sixth month in a bid to bolster growth when multiple economic indicators revealed faltering recovery momentum.
Political developments led to a busy morning for emerging markets. The Thai baht climbed as pro-democracy parties got the most votes in weekend elections, and the rand rallied after South Africa moved to ease tensions with the US. Investors awaited trading in the lira with Turkey’s presidential race hanging in the balance.
US inflation concerns ratcheted higher Friday, with a preliminary University of Michigan sentiment survey showing five-year expectations for consumer-price gains jumped to a 12-year high.
“There’s quite a fair bit of ongoing risk in the market,” Audrey Goh, senior cross asset strategist at Standard Chartered Wealth Management Group, said in an interview on Bloomberg Television. “The debt-ceiling talks are still in the making, at the same time we’ve also got inflation still quite elevated. There could be further downside from here where equity markets are concerned.”
Progress in US debt-ceiling talks hasn’t removed the risk of a failure to reach a compromise. Treasury Secretary Janet Yellen has said the department may run out of money as soon as June 1, or in the weeks after that. President Joe Biden and House Speaker Kevin McCarthy plan to meet Tuesday.
Hawkish Fed
Hawkish comments from Fed officials have added to unease among investors. Inflation is still too high, Chicago Fed President Austan Goolsbee said in a PBS interview. “You don’t want to land the plane nose down. So we’re trying to balance off — can we slow the inflation without sending it into a recession.”
Goolsbee’s comments followed those of Fed Governor Michelle Bowman who said the central bank will likely need to raise interest rates further if price pressures don’t cool.
Yields on policy-sensitive two-year Treasuries were little changed at 3.98%. Australian and New Zealand bonds declined, following Friday’s losses in US debt.
The Bloomberg dollar index edged lower after gaining 1% last week, its biggest weekly advance since February. Bitcoin remained below $27,000.
Billionaire Gautam Adani’s empire continues to draw the market’s attention. Two of his companies including his flagship firm are seeking to raise as much as $2.6 billion, signaling the Indian conglomerate wants to focus on growth.
Elsewhere in markets, oil held a fourth weekly loss as the outlook for demand is damped by worries over the US economy and China’s slower-than-expected recovery.
Key events this week:
- Eurozone industrial production, Monday
- US cross-border investment, New York Fed Empire Manufacturing, Monday
- Atlanta Fed’s Raphael Bostic speaks at his bank’s annual financial markets conference, Monday
- China retail sales, industrial production, Tuesday
- US retail sales, industrial production, business inventories, Tuesday
- Fed speakers include Cleveland’s Loretta Mester, New York’s John Williams, Atlanta’s Raphael Bostic and Chicago’s Austan Goolsbee, Tuesday
- Japan GDP, Wednesday
- Eurozone CPI, Wednesday
- US housing starts, Wednesday
- BOE Governor Andrew Bailey speaks at the British Chamber of Commerce, Wednesday
- US initial jobless claims, Conference Board leading index, existing home sales, Thursday
- Japan CPI, Friday
- ECB President Christine Lagarde participates in panel at Brazil central bank conference, Friday
- New York Fed’s John Williams speaks at monetary policy research conference in Washington, and Fed Chair Jerome Powell and former chair Ben Bernanke to take part in panel discussion, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 11:46 a.m. Tokyo time. The S&P 500 fell 0.2% Friday
- Nasdaq 100 futures fell 0.1%. The Nasdaq 100 fell 0.4% Friday
- Japan’s Topix rose 0.5%
- Australia’s S&P/ASX 200 fell 0.2%
- Hong Kong’s Hang Seng was little changed
- The Shanghai Composite fell 0.7%
- Euro Stoxx 50 futures were little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0856
- The Japanese yen fell 0.2% to 135.95 per dollar
- The offshore yuan was little changed at 6.9719 per dollar
Cryptocurrencies
- Bitcoin rose 0.9% to $27,202.85
- Ether rose 1.5% to $1,826.64
Bonds
- The yield on 10-year Treasuries was little changed at 3.46%
- Australia’s 10-year yield advanced seven basis points to 3.40%
Commodities
- West Texas Intermediate crude fell 0.6% to $69.63 a barrel
- Spot gold rose 0.2% to $2,014.47 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Peyton Forte.
(An earlier version of this story was corrected to amend pricing of Hong Kong futures)
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