(Bloomberg) — US equity futures fell in early Asian trading as risk sentiment turned, weighing on the region’s equities. Oil prices resumed a selloff and investors retreated to the dollar.
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The action appeared to be linked to unverified media reports of explosions in Iran, Syria and Iraq. Oil prices rose suddenly early Friday with Brent and West Texas Intermediate climbing more than 2%.
Contracts for the S&P 500 fell more than 1% Friday, placing the US benchmark on track for a sixth consecutive decline should the underlying index end Friday lower.
The moves echoed a downbeat mood across markets that weakened Asian equities. Japanese stocks fell around 2%, while those in Australia and South Korea dropped more than 1%. Chinese benchmarks were mixed in opening trade.
Haven assets rallied. Treasury yields fell, with the 10-year’s nearing 4.5%. An index of dollar strength also advanced despite the dip in yields, as investors sought shelter.
The yen was slightly firmer against the greenback. Japanese inflation data released Friday came in below economists’ estimates. The 2.7% monthly reading for March was just short of the 2.8% consensus forecast. An increasing number of economists expect the BOJ to raise rates again in October after it stands pat next week, with most of them flagging an earlier move in July as a risk scenario, according to a Bloomberg survey.
US-listed shares of Taiwan Semiconductor Manufacturing Co. dropped 4.9% after the company revised down the revenue growth outlook for the semiconductor industry, citing a softer recovery across smartphone and personal computer sectors. Infosys Ltd. slumped in the US after forecasting tepid sales growth for the year.
New York Fed President John Williams said while it’s “not” his baseline expectation to hike interest rates, it’s possible — if warranted. His Atlanta counterpart Raphael Bostic said he doesn’t think it will be appropriate to ease until toward the end of 2024. The Fed may “potentially” hold rates steady all year, Minneapolis Fed chief Neel Kashkari told Fox News Channel.
In economic data, US jobless claims remained subdued, consistent with a healthy job market. Separately, the Philadelphia Fed factory index topped estimates. While existing-home sales fell, the pace was roughly in line with the median forecast of economists.
The market’s biggest worry right now is inflation, which is re-accelerating and throwing cold water on the idea of any rate cuts in 2024, according to Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management.
“We are firmly in the camp of no rate cuts in 2024,” he said. “We believe investors should prepare for a higher-for-longer regime when it comes to both inflation and interest rates and that investment portfolios should be positioned for these dynamics for the foreseeable future.”
Most emerging market currencies fell on Thursday, with the Mexican peso among the laggards as rising volatility derails carry trade positions that has propelled the currency higher for the past few months. Indonesia’s rupiah will be closely watched when trading resumes after the government asked state-owned firms to refrain from big dollar purchases in expectation the currency will weaken further.
Elsewhere, gold advanced amid growing political risks and demand from central banks and Chinese consumers.
Israel received its first-ever sovereign downgrade as S&P Global Ratings lowered its credit rating to A+ from AA- on heightened geopolitical risks for the region.
Key events this week:
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BOE Deputy Governor Dave Ramsden and ECB Governing Council member Joachim Nagel speak, Friday
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Chicago Fed President Austan Goolsbee speaks, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures fell 0.8% as of 10:24 a.m. Tokyo time
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Nasdaq 100 futures rose 1%
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Japan’s Topix fell 2.1%
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Australia’s S&P/ASX 200 fell 1.4%
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Hong Kong’s Hang Seng fell 0.9%
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The Shanghai Composite was little changed
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Euro Stoxx 50 futures fell 1.3%
Currencies
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The Bloomberg Dollar Spot Index rose 0.2%
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The euro fell 0.1% to $1.0630
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The Japanese yen was little changed at 154.52 per dollar
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The offshore yuan fell 0.1% to 7.2581 per dollar
Cryptocurrencies
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Bitcoin fell 2.5% to $61,927.86
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Ether fell 2% to $3,008.65
Bonds
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The yield on 10-year Treasuries declined five basis points to 4.58%
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Japan’s 10-year yield declined 3.5 basis points to 0.830%
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Australia’s 10-year yield declined two basis points to 4.25%
Commodities
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West Texas Intermediate crude rose 2.2% to $84.57 a barrel
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Spot gold rose 0.6% to $2,392.26 an ounce
This story was produced with the assistance of Bloomberg Automation.
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