Stocks in Asia were mixed Wednesday as investors assessed the path for monetary tightening and prepared for potential policy tweaks from the Bank of Japan.
(Bloomberg) — Stocks in Asia were mixed Wednesday as investors assessed the path for monetary tightening and prepared for potential policy tweaks from the Bank of Japan.
Equities in Australia and Japan rose fractionally while South Korean shares fell and stock futures for Hong Kong were marginally lower. Japan’s Topix has dropped more than 5% since its late November peak as the yen has strengthened amid speculation of a shift in monetary policy.
Contracts for the S&P 500 also declined after the benchmark snapped a four-day rally Tuesday in a further sign that the best start to a year for global equities in a generation is cooling.
The dollar was steady and the yen moved lower ahead of a highly anticipated policy meeting in Tokyo that could see the central bank alter its yield curve control program after widening its trading range last month.
The BOJ is likely to “modify or eliminate its yield-curve control policy because it’s not sustainable,” Kristina Hooper, chief global market strategist for Invesco Ltd., said in an interview with Bloomberg Television. “It’s clear that in this environment yields are going to go up.”
While economists expect the BOJ to stand pat for now, traders are testing policymakers. The benchmark 10-year Japanese government bond yield was one basis point below the BOJ’s target ceiling of 0.5% in early trading Wednesday but has breached that level on multiple occasions recently.
Treasury yields moved fractionally lower while rates on Australian and and New Zealand sovereign debt ticked higher.
Overnight in the US, Goldman Sachs Group Inc. shares fell after the lender reported a drop in investment-banking fees in the fourth quarter. Morgan Stanley, which also reported Tuesday, was buoyed by revenues from its asset and wealth management divisions, pushing its stock higher.
New York manufacturing data for January showed a decline to the lowest level since the early months of the pandemic, underscoring the pain facing producers as Federal Reserve rate hikes weigh on the economy.
Fed officials Raphael Bostic, Lorie Logan and Patrick Harker will speak Wednesday, providing potential clues on the outlook for rates.
Elsewhere, oil contracts traded higher as traders looked to a revival in Chinese demand this year after data showed the economy fared better than expected last quarter.
Key events this week:
- Bank of Japan rate decision, Wednesday
- Euro-zone CPI, Wednesday
- US retail sales, PPI, industrial production, business inventories, MBA mortgage applications, cross-border investment, Wednesday
- Federal Reserve releases Beige Book, Wednesday
- Fed speakers include Raphael Bostic, Lorie Logan and Patrick Harker, Wednesday
- US housing starts, initial jobless claims, Philadelphia Fed index, Thursday
- ECB account of its December policy meeting and President Christine Lagarde on a panel in Davos, Thursday
- Fed speakers include Susan Collins and John Williams, Thursday
- Japan CPI, Friday
- China loan prime rates, Friday
- US existing home sales, Friday
- IMF’s Kristalina Georgieva and ECB’s Lagarde speak in Davos, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.3% as of 9:31 a.m. Tokyo time. The S&P 500 fell 0.2%
- Nasdaq 100 futures fell 0.3%. The Nasdaq 100 rose 0.1%
- Hang Seng futures were marinally lower
- Japan’s Topix less than 0.1%
- Australia’s S&P/ASX 200 rose 0.1%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0784
- The British pound fell 0.1% to $1.2274
- The Japanese yen was down 0.3% at 128.47 per dollar
Cryptocurrencies
- Bitcoin was down 0.7% at $21,171
- Ether fell 0.7% to $1,569
Bonds
- The yield on 10-year Treasuries fell one basis poinbt to 3.54%
- Japan’s 10-year yield declined one basis point to 0.49%
- Australia’s 10-year yield advanced three basis points to 3.64%
Commodities
- West Texas Intermediate crude rose 0.6% to $80.63 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
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