global market: Stocks in Asia are set to open higher on Friday amid a global bond rally as fears of an economic slowdown prompted investors to re-evaluate expectations of inflation and hikes in attendant interest rates.
Equity futures signals in Japan, Australia and Hong Kong begin cautious after US stocks closed near session highs of over 3% in three days. Contracts for the S&P 500 and Nasdaq 100 sank in early Asian trade.
The Treasury extended a rally for the biggest weekly decline since March 2020, which put the policy-sensitive two-year yield on course. There was little change in the dollar gauge, while the yen jumped 1% against the greenback.
Oil fell by about $104 a barrel and a gauge of commodities fell back to their lowest level since February in signs of an economic crisis.
US data and latest comments federal Reserve Officials added to those concerns. Jobless claims hovered near a five-week high and manufacturing and services activity cooled.
Fed Chairman Jerome Powell reiterated in the testimony of lawmakers that his commitment to reduce price increases is “unconditional”.
Investors are grappling with the question of what will happen next if the economic slowdown takes hold. One scenario involves price reduction pressures and hence there is room for central banks to reduce the pace of interest rate hikes. Traders are starting to price any Fed action on rates beyond the December meeting and expect additional tightening.
Read more: Traders Hedge Fed Cuts in 2023 as Recession Risks Affect Yields
Citigroup Inc. As strategists William O’Donnell and Edward Acton wrote in a note, markets are negotiating a catastrophic transition from “front-loaded’ to demand destruction and extreme ‘price-pressure’.”
Elsewhere, bitcoin continued to hover slightly above the $20,000 level.
How will the second half of this year be for the major asset classes? We’ve been re-running MLIV’s 2022 asset survey since December to see how the street view has evolved amid the volatility and volatility over the past few months. Click here to participate anonymously.
What to watch this week:
- US University of Michigan Consumer Sentiment, Friday
- RBA’s Lowe speaks on panel, Friday
Some of the main moves in the markets:
shares
- As of 7:13 a.m. in Tokyo, S&P 500 futures were down 0.4%. S&P 500 up 1%
- Nasdaq 100 futures fell 0.4%. Nasdaq 100 up 1.5%
- Minor changes in Nikkei 225 futures
- Australia’s S&P/ASX 200 futures fell 0.1%
- Hang Seng Index futures fell 0.2%
currencies
- The Bloomberg Dollar Spot Index was slightly changed
- Euro $1.0527 . was on
- The Japanese yen was at 134.97 per dollar
- $ 6.6995 per offshore yuan . was on
bond
- Yield on 10-year Treasury declined seven basis points to 3.09%
Goods
- West Texas Intermediate crude fell 0.2% to $104.06 a barrel
- Gold was at $1,822.79 an ounce
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This story has been published without modification in text from a wire agency feed. Only the title has been changed.