Stocks Fall After Fledgling Rally, Yen Strengthens: Markets Wrap

(Bloomberg) — US and European equity futures fell and shares across Asia dropped on Tuesday in a sign that further pain lies ahead after global stocks tumbled by a fifth last year.

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Contracts for the Euro Stoxx 50 slipped more than 1%, taking the shine off a 1.7% jump for the index on Monday. Contracts for the S&P 500 also fell after initially rising early Tuesday. Shares in Hong Kong, South Korea and Australia each tumbled more than 1%.

The pressure facing stocks followed the sharp swings of last year that saw 20% in value wiped from global equities, the worst run since the financial crisis. Bonds lost 16% of value in 2022, the biggest decline since at least 1990 for one leading measure, as central banks hiked interest rates to slow consumer price gains.

The yen strengthened further after a jump on Monday to trade at the highest level since June. The Japanese currency gained against all G-10 currencies, in particular commodity currencies including Australia, New Zealand and Canada. The advance follows sustained efforts by the Bank of Japan to depress yields on government debt. The stronger yen indicates traders believe the central bank will be forced to reduce its easy policy settings as inflation rises.

An index of the dollar rose and the Australian 10-year yield climbed 5 basis points. There was no cash Treasuries trading in Asia given Japanese markets were shut Tuesday.

Read more: As Roads Split in 2022 Stocks, One Trade Made All the Difference

Elsewhere in markets, oil advanced while the price of US natural gas fell as warmer weather was expected to reduce demand for heating. China purchasing managers index data to be released later today is set to show the fifth monthly contraction. Other data on the docket for Tuesday includes German unemployment claims.

Read more: Treasury Strategists Expect Lower Yields, Steeper Curve in 2023

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Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.4% as of 10:31 a.m. Tokyo time
Australia’s S&P/ASX 200 fell 1.7%
Hong Kong’s Hang Seng fell 1.6%
The Shanghai Composite fell 0.1%
Euro Stoxx 50 futures fell 1.3%

Currencies

The Bloomberg Dollar Spot Index rose 0.1%
The euro was little changed at $1.0658
The Japanese yen rose 0.7% to 129.85 per dollar
The offshore yuan rose 0.2% to 6.9149 per dollar

Cryptocurrencies

Bitcoin fell 0.6% to $16,651.24
Ether fell 0.6% to $1,211.55

Bonds

Commodities

West Texas Intermediate crude fell 0.8% to $79.58 a barrel
Spot gold rose 0.3% to $1,829.88 an ounce

This story was produced with the assistance of Bloomberg Automation.