Stocks in Asia mixed on global rate hike pressures amid inflation; oil nears $120/bbl: Markets Wrap

Equities slipped in Japan and Australia. Technology shares rose in Hong Kong after a gauge of Chinese companies traded in the US was up 2% over the last two trading sessions last week. China swung between gains and losses as Beijing easing Covid-19 restrictions. US futures were choppy.

Asia markets, Asian stock market
S&P 500 futures and Nasdaq 100 futures rose 0.2% in early trading in Tokyo on Monday (File: Bloomberg)

Stocks in Asia traded mixed Monday, as investors assessed the trajectory of central banks’ monetary policy tightening aimed at dousing inflation.

Equities slipped in Japan and Australia. Technology shares rose in Hong Kong after a gauge of Chinese companies traded in the US was up 2% over the last two trading sessions last week. China swung between gains and losses as Beijing easing Covid-19 restrictions. US futures were choppy.

Treasury yields stabilized. Strong hiring in May suggested that the Federal Reserve won’t waver from its pace of steep interest-rate hikes to rein in price pressures. The next focus is May consumer prices due this week, which can help gauge whether US inflation has peaked. A dollar gauge was steady.

Crude oil traded near $120 a barrel as shortage worries persist. Saudi Arabia raised prices for its biggest market of Asia by more than expected, and the US was considering allowing more sanctioned Iranian oil onto global markets to counter the drop in Russian supplies.

Investors are fretting that a restrictive Fed could plunge the US economy into recession. The jobs report quelled some concern that the economy is slowing too sharply, but also strengthened the view that the Fed will keep hiking rates to tamp down on rising inflation. Cleveland Fed President Loretta Mester said she would back a half-point hike in September if inflation is not retreating. Market-derived odds for a third 50-basis-point increase in September held steady near 85%.

“The critical issue for markets is whether inflation can be brought under control by central banks without generating a recession,” Shane Oliver, head of investment strategy and chief economist at AMP Capital, said in a note. “Shares are likely to see continued short-term volatility as central banks continue to tighten to combat high inflation, the war in Ukraine continues and fears of recession remain.”

The European Central Bank will this week announce an end to bond purchases and formally begin the countdown to an increase in borrowing costs in July, joining global peers tightening monetary policy in the face of hot inflation.

Elsewhere, the pound was steady amid risks around a confidence vote on British Prime Minister Boris Johnson’s leadership.

Some of the main moves in markets: Stocks

  • S&P 500 futures rose 0.2% as of 10:37 a.m. in Tokyo. The S&P 500 fell 1.6%
  • Nasdaq 100 futures rose 0.2%. The Nasdaq 100 fell 2.7%
  • Topix index fell 0.2%
  • Australia’s S&P/ASX 200 Index lost 0.5%
  • Hang Seng Index was little changed
  • Shanghai Composite Index fell 0.1%

Currencies

  • The Bloomberg Dollar Spot Index was steady
  • The Japanese yen rose 0.2% to 130.64 per dollar
  • The offshore yuan rose 0.1% to 6.6509 per dollar
  • The euro was at $1.0712

Bonds

  • The yield on 10-year Treasuries was at 2.94%
  • Australia’s 10-year bond yield was at 3.49%

Commodities

  • West Texas Intermediate crude rose 0.4% to $119.32 a barrel
  • Gold was at $1,853.50 an ounce

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