(Bloomberg) — Asian stocks opened mixed on Tuesday as the rally in global equities shows signs of wavering and investors fret over China’s tepid post-pandemic recovery.
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Shares fell in Japan and South Korea, while stocks in Australia and futures for Hong Kong equities inched higher.
Contracts for US benchmarks slipped after Wall Street was shut for a holiday Monday. European stocks closed down 1%.
The moves pointed to further anxiety about Chinese growth and the lack of fresh stimulus from Beijing after a Monday sell-off across the region hit China’s large tech companies.
“We have a very different story across the different regions as it relates to inflation, a post-Covid recovery and what that means from a monetary and fiscal perspective,” Uma Moriarity, senior analyst, investment strategy and global ESG lead for Centersquare Investment Management Inc, said in an interview with Bloomberg Television.
China is set to reduce its one- and five-year loan prime rates Tuesday, in a further show of support for the economy, following the decision last week to reduce borrowing costs.
The yen weakened slightly versus the dollar, set for a fourth straight session of losses as Japan’s loose monetary policy weighs on the currency. The greenback was steady against most of its other Group-of-10 counterparts. The yuan traded narrowly after weakening Monday.
Treasury yields increased after a break from trading while short and long-term yields on Australian and New Zealand government bonds gained.
While there’s some hope a thaw in icy US-China relations could help spur risk-on trading, Secretary of State Antony Blinken tempered expectations after he became the highest-level American official to visit Beijing in five years, saying his nation has “no illusions about the challenges of managing this relationship.”
Meanwhile, with the path of Federal Reserve interest rates increasingly uncertain, US traders are vacillating between the lure of the rally and concern it’s exhausted and that the market has become overbought.
Wall Street’s rally has now erased more than a year of Fed-induced losses, with stocks, volatility and the dollar shaking off the impact of 10 rate hikes. The S&P 500 index just capped a fifth straight week of gains and is now higher than it was the day the Fed kicked off its campaign.
“Optimism, or maybe just squeezed pessimists, is perhaps the strongest theme in global markets right now,” Giles Gale, rates strategist at NatWest Markets, wrote in a note. “Inflation looks surprisingly well behaved despite the Fed’s weak protests.”
Read more: Wall Street Rally Wipes Away a Year of Fed-Induced Losses
Looking ahead, Fed Chair Jerome Powell will give his semi-annual report to Congress on Wednesday. Federal Reserve Bank of St. Louis President James Bullard and his counterparts in New York and Chicago are also among this week’s speakers.
Policymakers at the Fed kept interest rates unchanged at their latest meeting but warned of more tightening ahead. The decision last week came with forecasts for higher borrowing costs of 5.6% in 2023, implying two additional quarter-point rate hikes or one half-point increase before the end of the year.
Gold was steady after dipping 0.4% on Monday, while oil fell as China’s plans to support its economy were seen as insufficient to reignite demand.
Key events this week:
China loan prime rates, Tuesday
US housing starts, Tuesday
Federal Reserve Bank of St. Louis President James Bullard speaks, Tuesday
New York Fed President John Williams speaks, Tuesday
Federal Reserve Chair Jerome Powell delivers semi-annual congressional testimony before the House Financial Services Committee, Wednesday
Federal Reserve Bank of Chicago President Austan Goolsbee speaks, Wednesday
Eurozone consumer confidence, Thursday
Rate decisions in UK, Switzerland, Indonesia, Norway, Mexico, Philippines, Turkey, Thursday
US Conference Board leading index, initial jobless claims, current account, existing home sales, Thursday
Federal Reserve Chair Jerome Powell delivers semi-annual testimony to Congress before the Senate Banking Committee, Thursday
Cleveland Fed’s Loretta Mester speaks, Thursday
Eurozone S&P Global Eurozone Manufacturing PMI, S&P Global Eurozone Services PMI, Friday
Japan CPI, Friday
UK S&P Global / CIPS UK Manufacturing PMI, Friday
US S&P Global Manufacturing PMI, Friday
Federal Reserve Bank of St. Louis President James Bullard speaks, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.3% as of 9:31 a.m. Tokyo time. The S&P 500 fell 0.4% Friday
Nasdaq 100 futures fell 0.1%. The Nasdaq fell 0.7% Friday
Nikkei 225 futures (OSE) fell 0.5%
Japan’s Topix fell 0.5%
Australia’s S&P/ASX 200 rose 0.3%
Euro Stoxx 50 futures were little changed
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0919
The Japanese yen fell 0.1% to 142.16 per dollar
The offshore yuan was little changed at 7.1655 per dollar
The Australian dollar was little changed at $0.6849
Cryptocurrencies
Bitcoin rose 0.7% to $26,912.57
Ether rose 0.5% to $1,738.99
Bonds
The yield on 10-year Treasuries advanced six basis points to 3.82%
Japan’s 10-year yield was unchanged at 0.390%
Australia’s 10-year yield advanced eight basis points to 4.05%
Commodities
This story was produced with the assistance of Bloomberg Automation.
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Source: https://finance.yahoo.com/news/asian-stock-futures-mixed-global-222645015.html