(Bloomberg) — Most Asian stocks fell Friday following a decline in U.S. shares led by the technology sector as tightening monetary policy to fight inflation buffets investor sentiment.
Chinese technology stocks were again under pressure and Japan slid. U.S. equity futures steadied after the tech-heavy Nasdaq 100 sank the most since September. The gauge skidded on reduced appetite for more richly valued investments amid the Federal Reserve’s pivot toward reducing stimulus.
The 10-year Treasury yield pared some of a decline from U.S. hours. Continued demand for Treasuries potentially reflects worries that the fast-spreading omicron virus variant will spark curbs that dim the economic outlook.
A dollar gauge flirted with a third-straight weekly drop. Oil was lower for the first time in three days and Bitcoin fell below $48,000.
Central banks globally are prioritizing the fight against elevated price pressures by tightening monetary settings, while also keeping a wary eye on the impact of omicron. That backdrop has investors questioning whether global stocks are due for a rougher patch after almost doubling from pandemic lows.
“The cycle you are seeing here is really about a change in tone, a change in regime, the possibility of tighter policy next year, not just at the Fed, but globally,” Alicia Levine, head of equities and capital markets advisory at BNY Mellon Wealth Management, said on Bloomberg Television.
Rate Hike
The Bank of England unexpectedly raised interest rates on Thursday, sending the pound higher. The European Central Bank temporarily boosted regular monthly bond buying for half a year to smooth the exit from crisis stimulus.
The Federal Reserve this week doubled the pace at which it tapers bond purchases and projected three quarter-point rate increases in 2022, another three in 2023 and two more in 2024.
Elsewhere, Senate Democratic leaders failed to break a deadlock over President Joe Biden’s $2 trillion economic agenda, punting action on the tax and spending bill to January in a political blow to the White House.
U.S.-China Tension
But the Senate did pass legislation that would ban goods from China’s Xinjiang region unless companies prove they weren’t made with forced labor. The Biden administration also added 34 Chinese targets to its banned-entity list, keeping tension with Beijing on the boil.
In the latest U.S. data, applications for state unemployment benefits rose last week but remained near the lowest levels of the pandemic as the labor market recovery continues. U.S. housing starts strengthened in November to the fastest pace in eight months, while output at factories advanced solidly.
Omicron is continue to spread around the world. Biden warned that unvaccinated Americans face “a winter of severe illness and death,” while Japanese Prime Minister Fumio Kishida asked Pfizer Inc. for faster delivery of vaccines.
Here are some key events this week:
- Bank of Japan monetary policy decision, Friday.
- S&P Dow Jones Indices quarterly rebalance effective after markets close, Friday.
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.1% as of 10:43 a.m. in Tokyo. The S&P 500 fell 0.9%
- Nasdaq 100 futures added 0.1%. The Nasdaq 100 fell 2.6%
- Japan’s Topix index fell 0.8%
- South Korea’s Kospi increased 0.2%
- Australia’s S&P/ASX 200 index rose 0.5%
- Hong Kong’s Hang Seng index shed 0.5%
- China’s Shanghai Composite index fell 0.1%
- Euro Stoxx 50 futures declined 0.4%
Currencies
- The Bloomberg Dollar Spot Index was steady
- The euro was at $1.1323
- The Japanese yen was at 113.64 per dollar
- The offshore yuan was at 6.3769 per dollar
Bonds
- The yield on 10-year Treasuries rose one basis point to 1.42%
- Australia’s 10-year bond yield rose three basis points to 1.60%
Commodities
- West Texas Intermediate crude slipped 0.3% to $72.19 a barrel
- Gold traded at $1,800.84 an ounce
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