European stock futures stable, yen in focus: Market overview

Article Contents

(Bloomberg) — European and U.S. stock futures were steady on Friday while Asian shares fell, with the yen in focus after a sharp six-day slide and raising the risk of intervention.

Euro Stoxx 50 futures were little changed. Shares in Hong Kong, South Korea and Taiwan fell as the global tech rally showed signs of fatigue and concerns about the Chinese economy continued. U.S. stock futures were little changed as traders prepared for the expiration of triple witching derivatives. The dollar traded near its 2024 high ahead of U.S. and European economic data.

Article Contents

“The overnight sell-off in US tech stocks has weighed on the market, while the US dollar has also strengthened broadly in recent trading, which often weighs on Asian stocks,” said Chamath de Silva, senior fund manager at BetaShares Holdings.

The yen traded at around 159 to the dollar, its lowest level in nearly two months. That raised the risk that the Japanese government could again intervene in the market to support the yen. Masato Kanda, chief financial officer of the Japan Monetary Agency, said there was no change to the agency’s stance of taking appropriate measures if there were excessive currency fluctuations.

In Japan, inflation accelerated after the government raised taxes on renewable energy, giving the central bank reason to consider raising interest rates in coming months. Policymakers kept rates on hold when they met a week ago and declined to provide details about tapering bond purchases.

The bank’s chief executive said the projected loss figure was still subject to change, after warning earlier this week that losses could balloon to 1.5 trillion yen ($9.5 billion), triple the estimate from about a month ago.

Elsewhere in Asia, baijiu maker Kweichow Moutai is struggling with falling wholesale prices and is on the verge of losing its spot as China’s most valuable stock to Industrial and Commercial Bank of China. MSCI kept South Korea in its emerging market category after a short-selling ban undid the country’s efforts to upgrade to developed status.

Article Contents

Article Contents

Weakening economy

Government bonds were steady in Asia after nearly erasing this year’s losses.Treasuries fell on Thursday despite a slew of data suggesting the economy was softening.New housing starts fell to a four-year low and the Philadelphia Fed’s unemployment insurance index came in weaker than expected.Initial U.S. jobless claims were little changed.

Traders will soon be looking to purchasing managers’ index data in Europe and the U.S. for signs of improving economic activity and easing cost pressures. Kyle Rodda, an analyst at Capital.com in Melbourne, said the U.S. data will be the most impactful for the market, with close attention being paid to the price sub-index.

“A favorable scenario would be if headline data showed stronger growth momentum but price indexes continued to fall, especially in the services sector,” he said. “If there is evidence of persistent price pressures, expectations of a rate cut could fade.”

Wall Street is also preparing for the “triple witching,” a quarterly event when derivatives contracts involving stocks, index options and futures expire, causing traders to roll over existing positions or open new ones en masse. Options trading platform SpotGamma estimates that about $5.5 trillion will expire on Friday.

Article Contents

Traders are also watching signs of escalating global trade tensions as Western countries take steps to curb exports of Chinese-made electric vehicles. Prime Minister Justin Trudeau’s government is preparing new tariffs on Chinese electric vehicles to bring Canada in line with measures from the United States and the European Union, according to people familiar with the matter.

In commodities, crude oil was on track for its first weekly gain since early April as an unexpected decline in U.S. inventory levels combined with signs of strong demand suggested the economy in the world’s biggest consumer was thriving. Gold also rose.

Major events this week:

• S&P Global Services PMI, Friday
• U.S. Existing Home Sales, Conference Board Leading Index, Friday
• Fed President Thomas Barkin to speak on Friday

Some of the key market developments:

stock

• S&P 500 futures were little changed as of 6:49 a.m. London time.
• Nikkei 225 futures (OSE) fell 0.1%
• Japan’s TOPIX was little changed
• Australia’s S&P/ASX 200 rose 0.3%
• Hong Kong’s Hang Seng Index fell 1.6%
• The Shanghai Composite Index fell 0.2%
• Euro Stoxx 50 futures little changed
• Nasdaq 100 futures rose 0.2%

Article Contents

currency

• The Bloomberg Dollar Spot Index was little changed.
• The euro rose 0.1% to $1.0716.
• The Japanese yen remained unchanged at 158.93 yen to the dollar.
• The offshore yuan was little changed at 7.2873 per dollar.
• The Australian dollar was little changed at 0.6662
• The British pound was little changed at 1.2660 to the dollar

Cryptocurrency

• Bitcoin fell 0.8% to $64,550.49.
• Ether fell 0.5% to $3,508.04.

Bonds

• The yield on the 10-year Treasury note was little changed at 4.26%.
• Japan’s 10-year government bond yield rose 2.5 basis points to 0.975%.
• Australia’s 10-year government bond yield rose 2 basis points to 4.22%.

merchandise

• West Texas Intermediate crude oil was little changed
• Spot gold rose 0.2% to $2,363.75 an ounce.

This story was produced with assistance from Bloomberg Automation.

—With assistance from Stephen Kirkland and Winnie Hsu.

Article Contents