(Bloomberg) — Asian stock markets are expected to follow Wall Street’s decline as strong economic data and rising commodity prices fuel speculation that major central banks will keep interest rates high for an extended period of time. .
Most Read Articles on Bloomberg
Japan and Australian stock benchmark futures fell, while Hong Kong futures were little changed. Better-than-expected data on U.S. jobs and factory orders fueled skepticism about the pace of Federal Reserve easing, with traders saying they would cut interest rates less in 2024 than the central bank itself. In anticipation of this, the 10-year bond yield rose to an all-time high. November. That has weighed on U.S. stocks, which have ignored repriced central bank bets in recent months amid a wild rally.
“Equity bulls may have a hard time justifying buying stocks at such high levels as yields rise,” said Fawad Razaqzada of City Index and Forex.com. Ta. “Rising oil prices pose further risks to the inflation outlook. Additionally, numerous employment reports are expected throughout this week. Trading could be volatile.”
The global version of Citigroup’s Economic Surprise Index, which measures the difference between actual announcements and analysts’ expectations, is near its highest point in a year after better-than-expected data from around the world. . Just this week, the two largest economies, the United States and China, posted strong manufacturing numbers.
The S&P 500 index hit its lowest level in almost a month. Tesla Inc. led the mega-cap losses. The small-cap gauge fell nearly 2%. Wall Street’s favorite volatility indicator, the VIX index, soared. The yield on the US 10-year Treasury note rose 4 basis points to 4.35%. US oil prices rose above $85 for the first time since October, copper rebounded and gold set a new record. Bitcoin has crashed.
Traders on Wednesday weighed comments from two officials who will vote on this year’s monetary policy decisions as they awaited remarks from Federal Reserve Chairman Jerome Powell.
San Francisco Fed President Mary Daly and Cleveland Fed President Loretta Mester said they still expect the San Francisco Fed to cut interest rates three times in 2024, although they are in no hurry to start lowering borrowing costs.
Swap traders currently expect interest rates to fall by about 65 basis points this year, less than the 75 basis points indicated in the Fed’s latest “dot plot” forecast.
“Our base case is that the Fed attempts a soft landing and begins cutting rates in the second half of this year,” said Gargi Chaudhry of BlackRock. “Downside risks to economic growth have diminished, so the risk of just two Fed rate cuts now appears to be higher than the risk of four cuts,” he said.
U.S. stocks have soared from their October lows even as the Fed’s outlook for interest rate cuts has been postponed. JPMorgan Chase strategists led by Mislav Matejka say the disconnect between stock markets and interest rate expectations is a worrying sign. Earnings will need to accelerate to close the gap, they said.
Investors selling stocks over the possibility that the Fed will scale back its rate-cutting plans may be missing the point. The move could bode well for the economy and, by extension, the stock market, said Andrew Slimmon of Morgan Stanley Investment Management.
“I think a patient Fed is proving that the economy is strong,” Slimmon told Bloomberg TV. “That’s better for the stock.”
This week’s main events:
-
China Caixin releases PMI on Wednesday
-
Eurozone CPI, unemployment rate, Wednesday
-
Japanese services PMI, Wednesday
-
US ADP Employment, ISM Services, Wednesday
-
Federal Reserve Chairman Jerome Powell speaks on Wednesday
-
Fed’s Austan Goolsby, Adriana Kugler and Michelle Bowman will also speak Wednesday.
-
Eurozone S&P Global Services PMI, PPI, Thursday
-
U.S. new jobless claims, Challenger layoffs, Thursday
-
Fed’s Loretta Mester, Albert Moussallem, Thomas Barkin, Patrick Harker and Austan Goolsby speak Thursday
-
European Central Bank releases report on March interest rate decisions on Thursday
-
Eurozone retail sales Friday
-
U.S. unemployment rate, nonfarm payrolls, Friday
-
Fed’s Michelle Bowman, Thomas Barkin and Laurie Logan speak on Friday
The main movements in the market are:
stock
-
Hang Seng futures were little changed as of 7:26 a.m. Tokyo time.
-
S&P/ASX 200 futures down 0.4%
-
Nikkei 225 futures fell 0.6%
currency
cryptocurrency
-
Bitcoin fell 0.1% to $65,630.01.
-
Ether fell 0.2% to $3,264.7.
bond
merchandise
This article was produced in partnership with Bloomberg Automation.
Most Read Articles on Bloomberg Businessweek
©2024 Bloomberg LP
