Asian equities inched lower at the open Tuesday after US stocks pulled back short of entering a bull market. The dollar and Treasuries were little changed.
(Bloomberg) — Asian equities inched lower at the open Tuesday after US stocks pulled back short of entering a bull market. The dollar and Treasuries were little changed.
Shares declined in Japan and Australia, while stock futures pointed to small gains later in Hong Kong. Contracts for US stocks were also lower in Asia trading hours after tech shares led the S&P 500 down Monday, with Apple Inc. wiping out gains of as much as 2% in anticipation of a new mixed-reality headset.
Australian government bond yields and the currency fell slightly ahead of the central bank’s interest rate decision later Tuesday. The consensus view is for policymakers to stand pat, though some see the risk of a hike.
If the Reserve Bank of Australia raises benchmark borrowing costs, “as well as the knee jerk selloff in rates and support for the AUD this should elicit, much will turn on the accompanying statement and whether the Board thinks further tightening is still likely to be required,” Ray Attrill, head of foreign exchange strategy at National Australia Bank Ltd., wrote in a note.
The yield on the 10-year Treasury had closed flat Monday while shorter-end rates inched down after a report said the US services sector nearly stagnated in May, giving traders pause to rethink the Federal Reserve’s interest-rate hike path.
Speculation that the Fed may plan to keep rates steady in June but keep options open for later hikes ramped up after the Institute for Supply Management’s overall gauge of services unexpectedly fell to the lowest level of the year, offering a less upbeat assessment of the US economy.
Oil fell as traders weighed the outlook for supply and demand following Saudi Arabia’s pledge for extra supply cuts. Chevron Corp. and Exxon Mobil Corp. slipped Monday after rallying earlier on the Saudi’s pledge.
Traders in Asia will also be watching the release of consumer price index data in the Philippines, Thailand and Taiwan for fresh indications of the impact of the global inflationary cycle.
Treasury on Monday began its bill issuance flood that saw buyers storming into the upsized three- and six-month auctions, a move that many have expected will drain liquidity from the system.
Any move by the government or the Fed that can risk liquidity in the system “is something that will probably keep us in a range bound mode until we see where it all lands, including the Fed’s final decision on rates,” Sylvia Jablonski, CEO and chief investment officer at Defiance ETF, said on Bloomberg Television.
Elsewhere, gold was steady on Tuesday after advancing 0.7% in the previous session.
Key events this week:
- Rate decisions in Australia, Poland, Tuesday
- China forex reserves, trade, Wednesday
- US trade, consumer credit, Wednesday
- Canada rate decision, Wednesday
- EIA crude oil inventory data, Wednesday
- Eurozone GDP, Thursday
- Rate decisions in India, Peru, Thursday
- Japan GDP, Thursday
- US wholesale inventories, initial jobless claims, Thursday
- China PPI, CPI, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.1% as of 9:19 a.m. Tokyo time. The S&P 500 fell 0.2%
- Nasdaq 100 futures fell 0.2%. The Nasdaq 100 was little changed
- Japan’s Topix index fell 0.7%
- Australia’s S&P/ASX 200 Index fell 0.7%
- Hong Kong’s Hang Seng futures rose 0.3%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was unchanged at $1.0713
- The Japanese yen was little changed at 139.50 per dollar
- The offshore yuan was little changed at 7.1220 per dollar
- The Australian dollar was little changed at $0.6614
Cryptocurrencies
- Bitcoin rose 0.5% to $25,758.4
- Ether rose 0.4% to $1,811.69
Bonds
- The yield on 10-year Treasuries was unchanged at 3.68%
- Japan’s 10-year yield declined one basis point to 0.425%
- Australia’s 10-year yield declined two basis points to 3.76%
Commodities
- West Texas Intermediate crude fell 0.3% to $71.90 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Isabelle Lee and Vildana Hajric.
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