Shares in Asia were broadly lower and US equity futures fell as investors parsed mixed corporate earnings and signs of a robust US economy that support forecasts for higher interest rates.
(Bloomberg) — Shares in Asia were broadly lower and US equity futures fell as investors parsed mixed corporate earnings and signs of a robust US economy that support forecasts for higher interest rates.
A region-wide index of Asian stocks edged lower for a second day as benchmarks in Australia and South Korea fell, while Japanese stocks were flat and Chinese shares fluctuated.
The Federal Reserve’s monthly Beige Book survey released on Wednesday showed the US economy was “little changed” despite some signs of slowing. Fed Bank of New York President John Williams said the recent trend of slowing inflation continues but that price gains remain too high. Trader bets continue to lean toward a rate hike next month.
The yield on the policy-sensitive two-year Treasury was steady in Asia after rising five basis points to the highest level in a month.
New Zealand’s bond yields fell along with the currency after inflation data came in softer than anticipated. Australia’s 10-year yield was flat after the government released a review of the central bank.
The drop for US equity futures followed a flat day in New York trading. The CBOE VIX index of volatility to the lowest since 2021. A Bank of America global measure of volatility spanning stocks, rates, currencies and commodities sits at the lowest level since early 2022.
First-quarter US earnings were mixed. Tesla Inc. missed profit expectations while International Business Machines Corp. and Morgan Stanley beat forecasts.
“A recession doesn’t necessarily mean companies have to lose money,” Erin Gibbs, chief investment officer for Main Street Asset Management, said in an interview with Bloomberg Television. “Companies that have very strong free cash flows that don’t have to go to the banks and get new loans are the ones that tend to do well.”
In Asia, Taiwan Semiconductor Manufacturing Co. earnings will be in focus. Analysts expect the chip giant to post weak results and will focus on full-year revenue guidance.
Bank of Japan officials are reportedly wary of tweaking or scrapping the yield curve control program when the central bank meets next week following the banking issues in the US and Europe. The yen weakened.
Banks in China kept loan prime rates unchanged after the People’s Bank of China stayed put. An independent review of Australia’s central bank recommended setting up an expert policy board and fewer meetings followed by press conferences.
Elsewhere in markets, the dollar was steady, Bitcoin dropped below $30,000. Oil fell while gold was steady after a Wednesday decline pushed the precious metal below $2,000 an ounce.
Key events this week:
- 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 0.2% as of 11:58 a.m. Tokyo time. The S&P 500 was little changed
- Nasdaq 100 futures fell 0.4%. The Nasdaq 100 was little changed
- Japan’s Topix was little changed
- Australia’s S&P/ASX 200 was little changed
- Hong Kong’s Hang Seng was little changed
- The Shanghai Composite fell 0.6%
- Euro Stoxx 50 futures were little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0954
- The Japanese yen was little changed at 134.80 per dollar
- The offshore yuan was little changed at 6.9000 per dollar
Cryptocurrencies
- Bitcoin fell 1.7% to $28,758.97
- Ether fell 2.1% to $1,940.03
Bonds
- The yield on 10-year Treasuries was little changed at 3.59%
- Australia’s 10-year yield was little changed at 3.51%
Commodities
- West Texas Intermediate crude fell 0.8% to $78.50 a barrel
- Spot gold fell 0.2% to $1,991.87 an ounce
This story was produced with the assistance of Bloomberg Automation.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.