Stocks in Asia edged lower Thursday as hawkish comments from Federal Reserve officials prompted investors to rethink expectations about US peak rates.
(Bloomberg) — Stocks in Asia edged lower Thursday as hawkish comments from Federal Reserve officials prompted investors to rethink expectations about US peak rates.
A region-wide gauge of Asian shares fell as benchmarks in Japan and Australia declined. Mainland China and Hong Kong equity indexes bucked the trend to edge higher. US futures also climbed, moderating a 1.1% drop for the S&P 500 and a 1.8% fall for the tech-heavy Nasdaq 100.
The knock to risk sentiment hinged on comments from four Fed officials who spoke at separate events Wednesday and reinforced a shared message: the fight against inflation is not yet won. Fed-funds futures markets priced in higher rates, with some options traders betting the US policy benchmark will reach 6%.
“I don’t think the Fed will cut within this year,” Jun Bei Liu, portfolio manager at Tribeca Investment Partners, said on Bloomberg Television. “The Fed was behind the curve in terms of putting up their interest rate and they certainly are going to be very slow in cutting the interest rate.”
Fed Bank of New York President John Williams said prior Fed indications that would see rates rise to 5.1% remain accurate.
Treasury 10-year notes held the gains from a rally on Wednesday in the wake of a strong auction. Australian and New Zealand government bond yields climbed. An index of the dollar weakened and the yen was flat.
A 7.7% drop for Alphabet Inc. shares amplified the hit to tech stocks as investors showed concern that its new artificial intelligence chatbot Bard may yield inaccurate responses. Walt Disney Co. shares surged in after-hours trading following fourth-quarter earnings that outpaced estimates. The company unveiled a dramatic restructuring that includes slashing 7,000 jobs as part of a $5.5 billion cost-cutting plan.
“We continue to expect market volatility ahead as news flow on earnings, inflation, the economy, and Fed bounces from bullish to bearish and back again,” wrote Stephen Auth, chief investment officer of equities at Federated Hermes.
Shares in Adani Enterprises fell as much as 10% to snap a two-day rally after MSCI Inc. said it was reviewing the amount of Adani Group-linked shares that were freely tradable in public markets.
Meanwhile, Turkey’s stock exchange suspended trading for the first time in 24 years following a selloff that erased billions of dollars from the value of its main equities gauge in the wake of two devastating earthquakes. Trading in Turkish equities, futures and option contracts will resume on Feb. 15.
Elsewhere, oil steadied during trading in Asia after rallying about 7% over the previous three sessions as investors assessed the latest commentary from Fed officials and mixed Energy Information Administration data. Gold was little changed.
Key events:
- US initial jobless claims, Thursday
- ECB President Christine Lagarde participates in EU leaders summit, Thursday
- Bank of England Governor Andrew Bailey appears before Treasury Committee, Thursday
- US University of Michigan consumer sentiment, Friday
- Fed’s Christopher Waller and Patrick Harker speak, Friday
Some of the main moves in markets as of 1:05 p.m. Tokyo time:
Stocks
- S&P 500 futures rose 0.2%. The S&P 500 fell 1.1%
- Nasdaq 100 futures rose 0.2%. The Nasdaq 100 fell 1.8%
- Japan’s Topix was little changed
- Australia’s S&P/ASX 200 fell 0.6%
- Hong Kong’s Hang Seng rose 0.3%
- The Shanghai Composite rose 0.6%
- Euro Stoxx 50 futures rose 0.4%
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro rose 0.2% to $1.0730
- The Japanese yen was little changed at 131.38 per dollar
- The offshore yuan was little changed at 6.7955 per dollar
Cryptocurrencies
- Bitcoin fell 2.2% to $22,450.63
- Ether fell 2.3% to $1,614.9
Bonds
- The yield on 10-year Treasuries was little changed at 3.62%
- Australia’s 10-year yield advanced five basis points to 3.66%
Commodities
- West Texas Intermediate crude was little changed
- Spot gold rose 0.2% to $1,878.78 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rita Nazareth and Tassia Sipahutar.
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