US Futures, Asia Stocks Fall as Traders Trim Risk: Markets Wrap

US Futures, Asia Stocks Fall as Traders Trim Risk: Markets Wrap

Business
April 24, 2023 by secret
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(Bloomberg) — US equity futures declined with most stocks in Asia as traders trimmed risk levels before a slew of economic data this week that may help illuminate the path forward for interest rates. Most Read from Bloomberg Contracts for the S&P 500 and the Nasdaq 100 extended losses following a muted end to trading
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(Bloomberg) — US equity futures declined with most stocks in Asia as traders trimmed risk levels before a slew of economic data this week that may help illuminate the path forward for interest rates.

Most Read from Bloomberg

Contracts for the S&P 500 and the Nasdaq 100 extended losses following a muted end to trading last week, while Euro Stoxx 50 futures pointed to a slight decline. MSCI Inc.’s Asia Pacific Index was on course for the lowest close since end March, while equity benchmarks in Hong Kong, South Korea and Australia all dropped.

Leveraged investors boosted net short positions on 10-year Treasury futures to a record 1.29 million contracts as of April 18, data from the Commodity Futures Trading Commission show. That’s an indication they think the Federal Reserve will keep raising rates to tackle inflation.

“We should take the Fed at face value when they say rates are not going lower this year,” said Kieran Calder, head of equity research for Asia at Union Bancaire Privée in Singapore, on Bloomberg Television. “Inflation, especially core inflation, remains really sticky.”

Swaps markets continue to see Fed rates peaking in coming weeks before a series of cuts later this year. US GDP data is forecast to reveal slowing growth, while the so-called core PCE deflator, the central bank’s preferred inflation gauge, is expected to show price growth cooled.

Still, the Fed’s favored wages gauge is projected to show worker pay accelerated, according to forecasts from Bloomberg Economics.

Investors may be marking time waiting to see if Fed will proceed with a widely-expected 25 basis-point hike at the May 2-3 meeting, Ed Yardeni, founder of Yardeni Research Inc., wrote in a note.

Treasuries edged higher Monday, while most Australian bonds fell. US two-year yields, which are more sensitive to the outlook for Fed policy than longer maturities, were little changed Monday after climbing eight basis points last week.

The Bloomberg Dollar Spot Index gained while the Aussie weakened.

New Bank of Japan Governor Kazuo Ueda will hold his first policy meeting later this week. The central bank is planning to review and inspect policies taken over the past decades as soon as this week’s meeting, Sankei newspaper reported Sunday.

A global gauge of cross-asset volatility remained near the lowest since February 2022, while other volatility gauges, such as the VIX Index and the ICE BofA MOVE Index, are also well below recent highs.

The situation may not last. Volatility is likely to pick up due to the lack of clarity after the Fed’s May meeting, said Priya Misra, global head of rates strategy at TD Securities in New York. “There’s enough uncertainty on the economic outlook as well as how the Fed might respond,” she said on Bloomberg Radio.

Elsewhere this week, the euro-area will publish GDP data and there will be a policy decision in Sweden.

A busy week for earnings will include UBS Group AG, First Republic Bank and First Citizens Bank, the acquirer of Silicon Valley Bank. Tech companies will also be in the spotlight with those to report including Microsoft Corp., Meta Platforms Inc. and Amazon.com Inc.

Credit Suisse Group AG earlier Monday reported 61.2 billion francs ($69 billion) of outflows in the first quarter and net revenue of 18.47 billion francs. The bank said it expects a substantial loss in wealth management for this year.

In commodities, oil extended its drop following last week’s decline and gold slid.

Key events this week:

  • ECB Governing Council members Boris Vujcic, Francois Villeroy de Galhau, speak at events, Monday

  • US new home sales, consumer confidence, Tuesday

  • South Korea GDP, Tuesday

  • Australia CPI, Wednesday

  • Sweden rate decision, Wednesday

  • Eurozone economic, consumer confidence, Thursday

  • US initial jobless claims, GDP, Thursday

  • Bank of Japan meets on interest rates, Friday

  • Euro-area GDP, Friday

  • US personal income, Friday

Earnings highlights:

  • Monday: Coca-Cola, First Republic

  • Tuesday: Pepsi, General Motors, General Electric, McDonalds, Microsoft, UBS, UPS

  • Wednesday: Boeing, Meta, Hilton

  • Thursday: Amazon, American Airlines, Intel, Mastercard, Southwest Airlines, Hershey, Honeywell, Barclays

  • Friday: First Citizens Bank, acquirer of Silicon Valley Bank

Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 0.3% as of 6:30 a.m. London time. The S&P 500 rose 0.1% Friday

  • Nasdaq 100 futures fell 0.4%. The Nasdaq 100 rose 0.1%

  • Euro Stoxx 50 futures were little changed

  • Japan’s Topix index rose 0.1%

  • Hong Kong’s Hang Seng Index fell 1.2%

  • China’s Shanghai Composite Index fell 0.4%

  • Australia’s S&P/ASX 200 Index was little changed

Currencies

  • The Bloomberg Dollar Spot Index rose 0.2%

  • The euro fell 0.1% to $1.0975

  • The Japanese yen fell 0.1% to 134.36 per dollar

  • The offshore yuan fell 0.2% to 6.9116 per dollar

  • The Australian dollar fell 0.3% to $0.6671

Cryptocurrencies

  • Bitcoin rose 0.9% to $27,748.18

  • Ether rose 0.7% to $1,862.45

Bonds

  • The yield on 10-year Treasuries declined one basis point to 3.56%

  • Japan’s 10-year yield advanced 0.5 basis point to 0.465%

  • Australia’s 10-year yield was little changed at 3.46%

Commodities

  • West Texas Intermediate crude fell 1.2% to $76.94 a barrel

  • Spot gold fell 0.3% to $1,977.93 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Richard Henderson.

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©2023 Bloomberg L.P.



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