Stocks in Asia may face another challenging session Wednesday following jumps in Treasury yields and the dollar amid expectations of aggressive monetary tightening by the Federal Reserve to tackle inflation.
(Bloomberg) — Stocks in Asia may face another challenging session Wednesday following jumps in Treasury yields and the dollar amid expectations of aggressive monetary tightening by the Federal Reserve to tackle inflation.
Equity futures fell for Japan, Australia and Hong Kong, while US contracts fluctuated after the S&P 500 dipped but held above the closely-watched 3,900 level. US-listed Chinese shares posted their worst drop since mid-July.
A slew of corporate debt offerings and robust US service-sector activity sent Treasuries tumbling, lifting the 30-year yield to the highest since 2014. The economic data spurred bets on another 75 basis points Fed interest-rate hike.
The Bloomberg Dollar Spot Index hit another record. The yen slid to a fresh 24-year low. Greenback strength is rippling across the world, squeezing financial conditions and stoking inflation in other economies as rival currencies drop.
Markets are also contending with a debilitating energy crisis in Europe and Covid lockdowns in China, which continues to pursue a strategy of eliminating the virus despite the attendant economic cost. Concerns are growing about the outlook for company earnings given the various global economic headwinds.
“Many investors are walking on egg shells,” Kristina Hooper, chief global market strategist at Invesco, said on Bloomberg Television. “The real issue is that it could be a one-two punch. We could see the Fed continuing to pummel the economy with a significant rate hike, lets say 75 basis points, and then of course we get downward revisions to earnings that are significant.”
Elsewhere, Bitcoin held a retreat to below $19,000. Crude was little changed at about $87 a barrel, hampered by worries about demand.
What to watch this week:
- Apple event due to feature new iPhones, watches, Wednesday
- Bank of England Governor Andrew Bailey at Treasury Committee, Wednesday
- Fed’s Beige Book of regional economic activity, Wednesday
- Cleveland Fed President Loretta Mester due to speak, Wednesday
- European Central Bank rate decision, Thursday
- Fed Chair Jerome Powell due to speak, Thursday
- Chicago Fed President Charles Evans and his Minneapolis counterpart Neel Kashkari due to speak, Thursday
- EU energy ministers extraordinary meeting on emergency intervention in electricity markets, Friday
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Some of the main moves in markets:
Stocks
- S&P 500 futures were steady as of 7:22 a.m. in Tokyo. The S&P 500 fell 0.4%
- Nasdaq 100 futures were up 0.1%. The Nasdaq 100 fell 0.7%
- Nikkei 225 futures lost 0.2%
- Australia’s S&P/ASX 200 Index futures fell 0.5%
- Hang Seng Index futures fell 1%
Currencies
- The Bloomberg Dollar Spot Index rose 0.5%
- The euro was at $0.9904
- The Japanese yen was at 142.88 per dollar
- The offshore yuan was at 6.9703 per dollar
Bonds
- The yield on 10-year Treasuries advanced 16 basis points to 3.35%
Commodities
- West Texas Intermediate crude was at $86.88 a barrel
- Gold was at $1,701.77 an ounce
More stories like this are available on bloomberg.com
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