US & European Futures Pullback Alongside Asian Equities: Markets Wrap

(Bloomberg) – US and European stock futures fell along with Asian stocks on Tuesday as investors weighed the prospect that central banks would tighten monetary policy more than previously expected to tame inflation.

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Contracts for the S&P 500 and Nasdaq 100 futures fell more than 0.3%, signaling further downward pressure for US stocks after last week’s declines. The MSCI Asia Pacific Index slipped as much as 0.5% in mixed trading, which saw Japanese stocks swing between gains and losses while Chinese stocks fell sharply.

The drop in Chinese stocks came after the CSI 300 benchmark posted its best one-day gain since November on Monday, when strategists at Goldman Sachs Group Inc. said the nations’ stocks were down about a fifth from the previous year current levels could rise.

The dollar was higher, gaining against its peers in the Group-10 basket of currencies, as Asian government bond yields rose after trading was closed on Monday for a US bank holiday.

The yield on the two-year monetary policy term was nearly as high as it had been since November as traders awaited the release of the PCE deflator, which is the Federal Reserve’s preferred inflation measure later this week.

“While some will focus on US-China relations and point to upcoming Sino-Russian meetings this week, the repricing and rise in interest rate expectations will ultimately open up the downside of equity markets,” said Chris Weston, head of research at Pepperstone Group Ltd., wrote in a note.

Benchmark two-year New Zealand government bond yields rose on Tuesday, while Australian yields ticked higher. Economists expect the Reserve Bank of New Zealand to hike interest rates by 50 basis points on Wednesday.

Meanwhile, economic data released so far “certainly shakes the argument that the Federal Reserve may pause or even cut interest rates soon,” Chuck Cumello, president and chief executive officer of Essex Financial Services, told Bloomberg Radio. “We have a more volatile ride ahead of us and I think the market is finally waking up and rates will stay higher for longer,” he said.

The story goes on

Elsewhere, oil trading was choppy as investors weighed the possibility of further monetary tightening against signs of rising demand from China. Gold has changed little.

Important events this week:

• Planned earnings for the week are: Alibaba, Anglo American, AXA, BAE Systems, Baidu, BASF, Danone, Deutsche Telekom, Holcim, Home Depot, Hong Kong Exchanges & Clearing, HSBC, Iberdrola, Lloyds Banking Group, Moderna, Munich Re , Newmont, Nvidia, Rio Tinto, Walmart, Warner Bros Discovery

• PMIs for Japan, Eurozone, UK, US, Tuesday

• US Existing Home Sales, Tuesday

• US MBA Mortgage Applications, Wednesday

• The Federal Reserve Minutes from January 31st to February 31st. 1 policy meeting, Wednesday

• Eurozone CPI, Thursday

• US GDP, Initial Jobless Claims, Thursday

• Atlanta Fed President Raphael Bostic speaks Thursday

• The finance ministers and central bank governors of the G-20 meet in India from Thursday to Friday

• Japan CPI, Friday

• BOJ governor-nominee Kazuo Ueda appears before Japan’s lower house on Friday

Some of the key movements in the markets:

Shares

• S&P 500 futures were down 0.4% as of 12:32 p.m. Tokyo time.

• Nasdaq 100 futures fell 0.3%.

• The Japanese Topix index has hardly changed

• South Korea’s Kospi index was little changed

• Hong Kong’s Hang Seng index fell 1.1%

• China’s Shanghai Composite Index was little changed

• Australia’s S&P/ASX 200 index fell 0.2%

currencies

• The Bloomberg Dollar Spot Index rose 0.1%

• The euro fell 0.2% to $1.0665

• The Japanese yen fell 0.1% to 134.43 per dollar

• The offshore yuan fell 0.2% to 6.8759 per dollar

• The Australian dollar fell 0.1% to $0.6899

cryptocurrencies

• Bitcoin rose 0.8% to $24,975.93

• Ether was up 0.4% to $1,707.7

Bind

• The 10-year government bond yield rose four basis points to 3.85%

• Japan’s 10-year yield remained unchanged at 0.50%

• Australia’s 10-year yield rose two basis points to 3.83%

raw materials

• West Texas Intermediate crude was up 0.4% to $76.61 a barrel

• Spot gold fell 0.1% to $1,838.93 an ounce

This story was created with the support of Bloomberg Automation.

–Assisted by Akshay Chinchalkar and Richard Henderson.

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