A gauge of Asian equities fell as traders weighed earnings from Wall Street and Chinese stocks were hit by shareholders’ plans to trim their stakes.
(Bloomberg) — A gauge of Asian equities fell as traders weighed earnings from Wall Street and Chinese stocks were hit by shareholders’ plans to trim their stakes.
MSCI Inc.’s Asia Pacific Index declined as much as 0.5% and the Hang Seng China Enterprises Index retreated as much as 1.5%. Shares of some Korean drama production studios also slipped after Netflix Inc.’s subscriber numbers trailed Wall Street estimates.
Futures for the S&P 500 and the Nasdaq 100 remained in the red.
The weakness in the Chinese shares could be due to “people digesting the wave of share reduction in A-Share and some H-Share,” said Willer Chen, senior research analyst at Forsyth Barr Asia.
Two-year US yields, which are more sensitive to imminent policy moves, were little changed, hovering at 4.21%, while the rate on 10-year bonds was at 3.58%. Government bond yields in Australia and New Zealand showed small gains early. The dollar was steady.
Japan’s Sumitomo Mitsui Financial Group Inc. sold yen Additional Tier 1 bonds, becoming the first major global bank to issue such debt since the collapse of Credit Suisse Group AG last month.
Meanwhile, Bank of Atlanta President Raphael Bostic told CNBC that he favors raising rates one more time and then holding them above 5% for some time to curb inflation. His St. Louis counterpart James Bullard separately told Reuters that he favors getting rates into a 5.5% to 5.75% range. The benchmark currently sits between 4.75% and 5%.
Swaps pricing suggests a quarter point hike by the Fed in May, with rate cuts starting to take place in July.
“We think that that might be too early. We think that there could be a pivot, maybe towards the end of this year, but not maybe as soon as what the market is currently pricing,” Jonathan Liang, head of investment specialists for Asia ex-Japan at JPMorgan Asset Management, said on Bloomberg Television.
Despite the hawkish comments by the Fed officials, the Cboe Volatility Index stayed at its lowest since January 2022, remaining below 17. Bank of America’s GFSI Market Risk Index — a gauge of global volatility across assets — also remained near the lowest level since February 2022.
“There’s not a lot of volatility because I think there’s not enough evidence of a full-blown recession, nor is there evidence of a full-blown growth track out there,” Michael Cuggino, president and portfolio manager of San Francisco-based Permanent Portfolio Family of Funds, said on Bloomberg Radio.
In another sign of easing problems in the banking sector, Western Alliance Bancorp shares surged as much as 20% in late trading after it beat earnings estimates and said deposits recovered after the collapse of three US regional banks.
On the earnings front, Goldman Sachs Group Inc. fell as its results showed traders failed to capitalize on Wall Street’s fixed-income boom, contributing to firm-wide revenue that trailed estimates. Bank of America Corp. rose after profit beat expectations and Netflix retreated after the bell as its subscriber growth and revenue outlook missed projections.
Elsewhere in markets, Bitcoin held slightly above the closely watched $30,000 level. Oil fell and gold was flat after halting a two-day losing streak Tuesday.
Key events this week:
- Eurozone CPI, Wednesday
- Fed releases Beige Book, Wednesday
- Fed’s John Williams gives a speech, Wednesday
- Fed’s Austan Goolsbee is interviewed on NPR, Wednesday
- China loan prime rates, Thursday
- Eurozone consumer confidence, Thursday
- US initial jobless claims, existing home sales, index of leading economic indicators, Thursday
- ECB issues report on March policy meeting, Thursday
- Fed’s Christopher Waller speaks at cryptocurrency-focused event, Thursday
- Fed’s Patrick Harker speaks on “monetary policy and housing”, Thursday
- Fed’s Loretta Mester discusses the economic and policy outlook, Thursday
- Fed’s Raphael Bostic discusses regional and national economic conditions, Thursday
- Fed’s Michelle Bowman and Lorie Logan speak at event, Thursday
- PMIs for Eurozone, Friday
- Japan CPI, Friday
- Fed’s Lisa Cook discusses economic research at an event, Friday
Some of the main moves in the market:
Stocks
- S&P 500 futures fell 0.1% as of 11:53 a.m. Tokyo time. The S&P 500 rose 0.1%
- Nasdaq 100 futures fell 0.2%. The Nasdaq 100 was little changed
- Japan’s Topix index fell 0.2%
- Hong Kong’s Hang Seng Index fell 0.6%
- The Shanghai Composite Index fell 0.3%
- Australia’s S&P/ASX 200 Index rose 0.1%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0973
- The Japanese yen fell 0.1% to 134.30 per dollar
- The offshore yuan was little changed at 6.8820 per dollar
- The Australian dollar was little changed at $0.6727
Cryptocurrencies
- Bitcoin fell 0.8% to $30,193.38
- Ether was little changed at $2,092.49
Bonds
- The yield on 10-year Treasuries was little changed at 3.58%
- Australia’s 10-year yield advanced four basis points to 3.52%
Commodities
- West Texas Intermediate crude fell 0.1% to $80.76 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Sujata Rao, Naoto Hosoda, John Liu and Zhu Lin.
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