(Bloomberg) — European equity futures fell alongside benchmarks in Asia, while global bonds extended losses as traders look to close out a dismal year. Hong Kong was an exception as it reopened after holidays to rally on news of further reopening in China.
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Contracts for the Euro Stoxx 50 index edged lower while S&P 500 futures swung between gains and losses after the index fell 0.4% on Tuesday. Equity benchmarks in mainland China, Japan, South Korea and Australia fell, while the Hang Seng Index traded more than 1% higher.
A sovereign bond selloff in Australia and New Zealand, following Tuesday’s Treasuries decline, spurred the Bank of Japan to announce more unscheduled debt purchases to cap rising yields. The dovish move, alongside commentary from its summary of opinions from the December meeting, also spurred a 0.4% decline in the yen.
The cautious sentiment damped investor optimism for a rally in the last trading week of 2022 to cap a brutal year for financial markets. Global equities have lost a fifth of their value, the largest decline since 2008 on an annual basis, and an index of global bonds has slumped 16%. The dollar has surged 7% and the US 10-year yield has jumped to above 3.80% from just 1.5% at the end of 2021.
Reports that China would drop quarantine requirements for inbound visitors and begin issuing passports and Hong Kong travel permits to mainland residents increased concern about global inflation pressures as it reopens the economy.
Treasury 10-year yields held at 3.84% after a nine basis points move on Tuesday.
“We may get a pivot later on next year from the Federal Reserve where they actually start cutting rates, but that’s going to happen when the situation is going to become much more dire than it is now,” Matt Maley, chief market strategist for Miller Tabak + Co., said on Bloomberg TV. “If we just have this slow grind lower, the Fed’s going to keep interest rates at high levels even if they stop raising rates in any kind of way.”
China’s reopening also buoyed the outlook for oil, which clung to a three-week high, and came as Russia imposed some restrictions on crude exports to foreign buyers that adhere to a price cap.
Iron ore surged to its highest since early August, while copper gained in New York. Gold traded flat after edging above $1,800 an ounce in Tuesday trade.
Key events this week:
US initial jobless claims, Thursday
ECB publishes economic bulletin, Thursday
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 3:30 p.m. Tokyo time. The S&P 500 fell 0.4%
Nasdaq 100 futures were flat. The Nasdaq 100 fell 1.5%
Hong Kong’s Hang Seng rose 1.3%
The Shanghai Composite fell 0.2%
Japan’s Topix Index fell 0.1%
The S&P/ASX 200 Index fell 0.3%
Euro Stoxx 50 futures fell 0.2%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0650
The Japanese yen fell 0.3% to 133.91 per dollar
The offshore yuan was little changed at 6.9707 per dollar
Cryptocurrencies
Bitcoin fell 0.5% to $16,612.79
Ether fell 1.4% to $1,193.87
Bonds
The yield on 10-year Treasuries was little changed at 3.84%
Japan’s 10-year yield declined one basis point to 0.46%
Australia’s 10-year yield advanced 21 basis points to 4.03%
Commodities
West Texas Intermediate crude fell 0.2% to $79.36 a barrel
Spot gold fell 0.1% to $1,811.05 an ounce
This story was produced with the assistance of Bloomberg Automation.
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Source: https://finance.yahoo.com/news/asia-stocks-fall-us-shares-230900822.html