Asian equities weakened after technology stocks led Wall Street lower, with risk appetite sapped after data showed a softening in US manufacturing and its labor market.
(Bloomberg) — Asian equities weakened after technology stocks led Wall Street lower, with risk appetite sapped after data showed a softening in US manufacturing and its labor market.
Shares in Australia and Japan opened lower while futures contracts for Hong Kong stocks fell. US benchmarks were little changed. The tech-heavy Nasdaq 100 had declined on Thursday, with Tesla Inc. losing almost 10% after signaling it will keep cutting prices to stoke demand. The S&P 500 had fallen ahead of Friday’s options expiration.
The dollar was little changed after retreating against developed-market peers on Thursday, as traders pared back expectations for Federal Reserve rate hikes. The policy-sensitive two-year Treasury yield was steady after declining 10 basis points to 4.14% on Thursday.
Fed Bank of Cleveland President Loretta Mester signaled support for another rate hike to quell inflation while flagging the need to watch recent bank stress that could crimp credit and dampen the economy. Her Dallas counterpart Lorie Logan said inflation has been “much too high,” while outlining measures to watch.
“If the Fed stays the course, broad financial conditions should continue to tighten, the economy should decelerate into recession, and stocks should trade down sharply,” wrote Chris Senyek of Wolfe Research. “On the flip side, the biggest upside risk to our bearish call remains the Fed backing off way too soon. Although, if the Fed fails to sustainably bring down inflation, the ultimate pain will likely be much worse 12-24 months down the road.”
Recurring unemployment benefit claims jumped to the highest level since November 2021, adding to signs that the labor market is beginning to lose momentum. Sales of previously-owned homes fell in March by more than forecast, underscoring a housing market that’s still on shaky footing despite some signs of stabilizing. US mortgage rates rose for the first time since early March.
The Treasuries action weighed on the New Zealand 10-year yield, which fell for a second day. The yen strengthened following data from Japan that showed a key measure of inflation outpacing forecasts ahead of a Bank of Japan meeting next week.
Traders in China will be watching out for reaction to US President Joe Biden’s plans to sign an executive order in the coming weeks that will limit investment in key parts of China’s economy by American businesse.
In other markets, oil fell the most in more than a month on Thursday, wiping out almost all of the gains stemming from OPEC+’s surprise output cut on signs of a global economic slowdown. Gold was little changed around the $2,000 an ounce mark.
Key events this week:
- 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 were little changed as of 9:15 a.m. Tokyo time. The S&P 500 fell 0.6%
- Nasdaq 100 futures rose 0.1%. The Nasdaq 100 fell 0.8%
- Hang Seng futures fell 0.6%
- Japan’s Topix fell 0.2%
- Australia’s S&P/ASX 200 fell 0.6%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0965
- The Japanese yen was little changed at 134.13 per dollar
- The offshore yuan was little changed at 6.8827 per dollar
Cryptocurrencies
- Bitcoin rose 0.3% to $28,278.44
- Ether rose 0.3% to $1,943.41
Bonds
- The yield on 10-year Treasuries was little changed at 3.54%
- Australia’s 10-year yield was little changed at 3.49%
Commodities
- West Texas Intermediate crude fell 0.2% to $77.18 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
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