(Bloomberg Opinion) — Stocks in Asia were mixed Monday after a sharp sell-off on Wall Street late last week, as investors raised forecasts for U.S. interest rates following data from inflation.
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Stocks fell in Australia and South Korea, while they fluctuated in China and Japan. Hong Kong’s Hang Seng Index initially looked set to erase its advance by 2023 before swinging slightly higher.
US futures rose, erasing Friday’s decline of more than 1% for the S&P 500 and Nasdaq 100, which suffered their worst week since December.
Investor jitters over riskier assets follow an unexpected acceleration in January in the personal consumption expenditures price index, the Federal Reserve’s favorite inflation gauge. The release of PCE data on Friday prompted a quick repricing of interest rate forecasts, with traders now pricing US rates at a high of 5.4% this year, compared to expectations just a month ago that rates would peak at less than 5%.
“It seems premature to call a change in risk this week,” Chris Weston, head of research at Pepperstone Group Ltd., in a Monday note. “The clouds of uncertainty remain with us: the consensus view of the market that inflation would decrease throughout the year has clearly been called into question.”
The 10-year Treasury yield fell one basis point in Asia on Monday after a seven basis point jump on Friday. Elevated yields continued to support the dollar, with the dollar gauge slightly lower after rising 0.7% on Friday.
The Australian 10-year bond yield rose seven points, while the New Zealand 10-year bond yield rose three basis points and was near the highest level since November.
The yen inched higher against the dollar after a sharp decline on Friday. Bank of Japan gubernatorial candidate Kazuo Ueda will speak again in the Japanese parliament on Monday. Inflation data released last week showed prices in the nation were rising at the fastest pace in four decades, putting pressure on the central bank to reassess its loose policies.
Data to be released later in the day will provide additional context for the global economic outlook. Eurozone consumer and economic confidence is expected, along with US durable goods data.
On the geopolitical front, the US will impose a 200% tariff on all Russian-made aluminum imports, as well as aluminum products made from domestically cast or cast metal, in a move that could impact Russian global manufacturing supply chains.
Late last week, Treasury Secretary Janet Yellen warned China and other nations against providing material support to Russia, saying such actions would amount to sanctions evasion and “cause very serious consequences.”
Key events this week:
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Eurozone Economic Confidence, Consumer Confidence, Monday
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US Durable Goods, Monday
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US Wholesale Inventories, Conf. Consumer Confidence Council, Tuesday
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China PMI Manufacturing, Non-Manufacturing PMI, Caixin Manufacturing PMI, Wednesday
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Eurozone S&P Global Eurozone manufacturing PMI, Wednesday
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US Construction Spending, ISM Manufacturing, Light Vehicle Sales, Wednesday
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Eurozone CPI, unemployment, Thursday
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Initial jobless claims in the US, Thursday
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Eurozone S&P Global Eurozone Services PMI, PPI, Friday
Some of the main movements in the markets:
Stocks
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S&P 500 futures were up 0.2% as of 10:49 a.m. Tokyo time.
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Nasdaq 100 futures rose 0.3%
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Japan’s Topix rose 0.2%
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Australia’s S&P/ASX 200 fell 1.1%
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Hong Kong’s Hang Seng fluctuated
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The Shanghai Composite rose 0.1%
coins
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0558
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The Japanese yen rose 0.2% to 136.17 per dollar
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The offshore yuan rose 0.2% to 6.9673 per dollar
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The Australian dollar rose 0.2% to $0.6738
CRYPTOCURRENCIES
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Bitcoin was little changed at $23,540.83
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Ether was little changed at $1,641.26
Captivity
raw Materials
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West Texas Intermediate crude rose 0.1% to $76.40 a barrel
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Spot gold rose 0.1% to $1,813.31 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With the assistance of Akshay Chinchalkar.
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