(Bloomberg) — Stocks in Asia look set to open steady Wednesday as investors fret about interest rates increases that dragged down U.S. stocks from a record and extended a decline in Treasuries.
Australian shares opened little changed. Futures ticked higher in Japan and dipped in Hong Kong. U.S. contracts were steady after the Nasdaq 100 underperformed amid a selloff in technology shares and the S&P 500 was little changed.
The rout in U.S. Treasuries deepened for a second day amid increasing conviction the Federal Reserve will raise rates at least three times beginning in May to counter price pressures. Yields on long maturities climbed amid heavy supply of new corporate bonds following a year-end lull. The dollar was little changed, while the yen hit the lowest since January 2017.
Chinese stocks will be closely watched after they suffered their worst start to the new year since 2019. An index of New York-traded companies with their business predominantly in China fell the most in more than two weeks.
U.S. December payroll data and minutes from the Fed’s meeting last month may throw more light this week on the potential pace of rate hikes. Minneapolis Fed President Neel Kashkari said he supports two rate increases this year to counter risks posed by inflation.
“Earlier we thought that rate hikes wouldn’t be on the table until mid-2022 but the Fed seems to have worked up a consensus to taper faster and hike sooner rather than later,” Steve Englander, head of global G-10 FX research at Standard Chartered, said in a note. “But we don’t think inflation dynamics will support continued hiking. We suspect the biggest driver of asset markets will be when inflation and Covid fears begin to ebb.”
Data Tuesday showed mixed signs on U.S. inflation. Prices paid by manufacturers in December came in sharply lower than expected. However, figures showing a record U.S. job quit rate added to concerns over wage inflation.
Crude oil in New York held gains. OPEC and its allies agreed to revive more halted production as the outlook for global oil markets improved, with demand largely withstanding the new coronavirus variant.
Elsewhere, Bitcoin traded near $46,000. Goldman Sachs Group Inc. predicts $100,000 is possible as the cryptocurrency continues to take market share from gold as a store of value.
What to watch this week:
- FOMC meeting minutes scheduled for release Wednesday
- Fed’s Bullard discusses the U.S. economy and monetary policy in an event on Thursday
- Fed’s Daly discusses monetary policy on a panel Friday
- ECB’s Schnabel speaks on a panel Saturday
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 8:05 a.m. in Tokyo. The S&P 500 was little changed
- Nasdaq 100 were little changed. The Nasdaq 100 fell 1.4%
- Nikkei 225 futures rose 0.2%
- Australia’s S&P/ASX 200 Index rose 0.2%
- Hang Seng Index futures fell 0.2% earlier
Currencies
- The Japanese yen traded at 116.16 per dollar
- The offshore yuan was at 6.3764 per dollar
- The Bloomberg Dollar Spot Index was little changed Tuesday
- The euro was at $1.1286
Bonds
- The yield on 10-year Treasuries advanced two basis points to 1.65%
- Australia’s 10-year bond yield rose one basis point to 1.76%
Commodities
- West Texas Intermediate crude rose 0.2% to $77.12 a barrel
- Gold was at $1,813.82 an ounce
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
