Asian equities face declines after a technology-driven rally on Wall Street failed to ease the malaise hanging over the banking sector. The dollar inched higher against major peers after weakening in the previous six sessions.
(Bloomberg) — Asian equities face declines after a technology-driven rally on Wall Street failed to ease the malaise hanging over the banking sector. The dollar inched higher against major peers after weakening in the previous six sessions.
Stock futures pointed to declines in Hong Kong and Australia, while those for Japan were little changed. That comes after traders in the US piled into top technology companies including Apple Inc. and Microsoft Corp. to push the Nasdaq 100 close to the threshold of a bull market after an almost 20% surge from its December low.
Banking stocks missed out on the rally, with a gauge of US financial heavyweights such as Wells Fargo & Co. and Bank of America Corp. sinking to the lowest since November 2020. The lenders slumped even after Treasury Secretary Janet Yellen told lawmakers the US would be prepared for further steps to protect deposits if needed.
Government bond yields in Asia opened lower, with drops of less than 5 basis points in Australia and New Zealand. That followed outsized moves in short-dated Treasuries for an 11th straight trading day as investors pessimistic about the economic outlook cemented their view that the Fed will need to slash interest rates later this year.
“The push-and-pull between financial market stability and inflation that is receding more slowly than anyone would prefer will further complicate an already significant challenge for the Fed, increasing the risk of a policy misstep and keeping the door open for a potential recession on the horizon,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors.
A gauge of dollar strength clawed back a loss as the risk tone soured following the drop in US bank shares but still ended down for a sixth session — its longest losing streak since April 2021. The dollar strengthened against most of a basket of 10 peers on Friday.
Comments by Treasury Secretary Janet Yellen about additional deposit actions, if warranted, offered investors comfort while they digested earlier rate hikes by the Bank of England, Norges Bank and Swiss National Bank and hawkish comments by European Central Bank officials.
On the economic front, applications for US unemployment benefits unexpectedly eased for a second week, underscoring a still-tight job market in which employers are reluctant to reduce headcount. Sales of new homes unexpectedly rose in February after a downward revision to the prior month, suggesting the housing market is beginning to stabilize after a tumultuous year.
Elsewhere, the Bank of England pushed ahead with another interest rate increase despite turmoil in the banking sector, predicting the UK economy will avoid a recession for now and that inflation remains a risk.
Key events this week:
- Eurozone S&P Global Eurozone Manufacturing PMI, S&P Global Eurozone Services PMI, Friday
- US durable goods, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.2% as of 7:04 a.m. Tokyo time. The S&P 500 rose 0.3%
- Nasdaq 100 futures rose 0.1%. The Nasdaq 100 rose 1.3%
- Hang Seng futures fell 0.8%
- Nikkei 225 futures were little changed
- S&P/ASX 200 futures fell 0.6%
Currencies
- The euro was little changed at $1.0835
- The Japanese yen was little changed at 130.81 per dollar
- The offshore yuan was little changed at 6.8293 per dollar
- The Australian dollar was little changed at $0.6686
Cryptocurrencies
- Bitcoin fell 0.5% to $28,198.95
- Ether fell 0.2% to $1,815.96
Bonds
- The yield on 10-year Treasuries was little changed at 3.43%
- Australia’s 10-year yield declined one basis point to 3.28%
- New Zealand’s 10-year yield declined three basis points to 4.14%
Commodities
- West Texas Intermediate crude fell 0.6% to $69.51 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rita Nazareth.
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