(Bloomberg) -- A gauge of Asian stocks swung lower as trading got underway in China, led by declines in Hong Kong listed technology shares.
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The drop clawed back some of the sharp moves higher in Chinese equities Tuesday and came after the S&P 500 closed near the lowest in six weeks and as the 10-year Treasury yield pierced the closely watched 4% level.
Swaps markets are now pricing in a peak US policy rate of 5.5% in September, with some traders betting it may reach 6%. That’s spilling over into markets around the world, even as China’s economy shows signs of rebounding strongly after exiting its Covid-zero policy.
“The good news out of China is what the market has really needed at this point where globally we are seeing these inflation concerns not dying out,” Charu Chanana, senior markets strategist at Saxo Capital Markets, said on Bloomberg Television.
Yet she warned that this good news has a negative side in terms of global inflation: “The China reopening story adds cyclical upside pressure because of the sheer amount of demand that China can create.”
Yields on Australian and New Zealand government bonds rose across the 2-year to 10-year maturities in moves that largely tracked Treasuries. The 10-year Treasury remained just above 4% in early Asian trading.
The dollar rose against its Group-of-10 counterparts after a gauge of greenback strength dropped 0.5% on Wednesday, the most in a month.
The offshore yuan weakened after being one of the most notable gainers versus the dollar Wednesday, when it rallied more than 1% in its largest advance since November.
Fed Speak
The trigger for higher yields was Fed officials on Wednesday reinforcing their hawkish stance. Atlanta Fed’s Raphael Bostic called for continued rate hikes to above 5% to make sure inflation doesn’t pick up again. Minneapolis Fed President Neel Kashkari, meanwhile, said he’s concerned that there isn’t much of an indication that the central bank’s rate hikes are slowing down the services sector.
While China’s economic data briefly buoyed US stock futures before the markets opened, that bounce didn’t sustain during Wednesday’s trading session.
US stock futures were lower in Asia.
Key events this week:
-
Eurozone CPI, unemployment, Thursday
-
US initial jobless claims, Thursday
-
Eurozone S&P Global Eurozone Services PMI, PPI, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures fell 0.6% as of 10:42 a.m. Tokyo time. The S&P 500 fell 0.5% lower
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Nasdaq 100 futures fell 0.8%. The Nasdaq 100 fell 0.9%
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Japan’s Topix fell 0.3%
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Australia’s S&P/ASX 200 Index was little changed
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Hong Kong’s Hang Seng Index fell 1.4%
Currencies
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The Bloomberg Dollar Spot Index rose 0.2%
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The euro fell 0.2% to $1.0648
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The Japanese yen fell 0.2% to 136.43 per dollar
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The offshore yuan fell 0.3% to 6.9024 per dollar
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The Australian dollar fell 0.5% to $0.6729
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The offshore yuan fell 0.3% to 6.9023 per dollar
Cryptocurrencies
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Bitcoin fell 0.3% to $23,487.17
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Ether fell 0.6% to $1,646.83
Bonds
Commodities
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West Texas Intermediate crude fell 0.2% to $77.53 a barrel
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Spot gold fell 0.3% to $1,831.79 an ounce
This story was produced with the assistance of Bloomberg Automation.
--With assistance from Rheaa Rao.
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