US, European Futures Retreat Alongside Asia Stocks: Markets Wrap

(Bloomberg) — US and European equity futures declined along with Asian stocks on Tuesday as investors weighed the prospect of central banks tightening policy more than previously expected to tame inflation.

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Contracts for the S&P 500 and the Nasdaq 100 futures lost more than 0.3%, indicating further downward pressure for US stocks after declines last week. The MSCI Asia Pacific Index slid as much as 0.5% in mixed trading that saw Japanese shares swing between gains and losses.

Hong Kong’s Hang Seng Index fell. HSBC, the second-largest company in benchmark, beat profit forecasts in fourth-quarter results released after the morning trading session.

Mainland China stocks fluctuated after the CSI 300 benchmark posted its best one-day gain since November on Monday, when Goldman Sachs Group Inc. strategists said the nation’s equities could surge about a fifth from current levels this year.

The dollar ticked higher, advancing against peers in the Group-of-10 currency basket, as Treasury yields climbed in Asia after trading was closed for a US holiday on Monday.

Yield on the policy-sensitive two-year maturity was near the highest since November as traders awaited the release of the PCE deflator, which is the Federal Reserve’s preferred measure of inflation, later this week.

“While some will focus on US-China relations and point to upcoming meetings between the Chinese and Russians this week, the repricing and push higher in interest rate expectations will eventually open up the downside in equity markets,” Chris Weston, head of research at Pepperstone Group Ltd., wrote in a note.

Benchmark two-year yields on New Zealand government bonds rose Tuesday while Australian yields ticked higher. Economists expect the Reserve Bank of New Zealand to hike its policy rate by 50 basis points on Wednesday.

Meanwhile, economic data that has come out so far “certainly puts a lot of cold water” on the argument that the Federal Reserve may pause or even cut rates soon, Chuck Cumello, president and chief executive officer of Essex Financial Services, said on Bloomberg Radio. “We’re in for a more volatile ride and I think the market is finally waking up to rates are going to stay higher for longer,” he said.

Elsewhere, trading of oil was choppy as investors weighed the possibility of further monetary tightening against signs of improving demand from China. Gold was little changed.

Key events this week:

Earnings for the week are scheduled to include: Alibaba, Anglo American, AXA, BAE Systems, Baidu, BASF, Danone, Deutsche Telekom, Holcim, Home Depot, Hong Kong Exchanges & Clearing, Iberdrola, Lloyds Banking Group, Moderna, Munich Re, Newmont, Nvidia, Rio Tinto, Walmart, Warner Bros Discovery
PMIs for Japan, Eurozone, UK, US, Tuesday
US existing home sales, Tuesday
US MBA mortgage applications, Wednesday
The Federal Reserve minutes from Jan. 31-Feb. 1 policy meeting, Wednesday
Eurozone CPI, Thursday
US GDP, initial jobless claims, Thursday
Atlanta Fed President Raphael Bostic speaks, Thursday
G-20 finance ministers and central bank governors meet in India, Thursday-Friday
Japan CPI, Friday
BOJ governor-nominee Kazuo Ueda appears before Japan’s lower house, Friday

Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.4% as of 1:34 p.m. Tokyo time
Japan’s Topix was little changed
Australia’s S&P/ASX 200 fell 0.2%
Hong Kong’s Hang Seng fell 1%
The Shanghai Composite rose 0.1%
Euro Stoxx 50 futures fell 0.2%

Currencies

The Bloomberg Dollar Spot Index rose 0.2%
The euro fell 0.2% to $1.0665
The Japanese yen was little changed at 134.38 per dollar
The offshore yuan fell 0.3% to 6.8785 per dollar

Cryptocurrencies

Bitcoin rose 0.5% to $24,894.6
Ether fell 0.2% to $1,698.27

Bonds

Commodities

West Texas Intermediate crude was little changed
Spot gold fell 0.2% to $1,837.59 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Akshay Chinchalkar and Richard Henderson.