Sydney: Asian stocks are back in bear-market territory after another dive on Wall Street, where concerns have spread to the corporate-bond market. Investors are also contending with no obvious havens, with Treasuries little changed so far this week and gold weaker.
Equity benchmarks retreated across the region though U.S. futures edged higher. Oil tumbling toward $53 a barrel weighed on energy companies, while a plunge in Apple shares hit suppliers in Asia. All major U.S. benchmarks fell more than 1.5 percent Tuesday. The S&P 500 Index briefly slid 10 percent below its September record close before clawing back just above the threshold. Two-year Treasury yields are up slightly this week, suggesting no sea-change in views on the Federal Reserve’s path of tightening.
More than a week before Presidents Donald Trump and Xi Jinping meet to address their trade war, the U.S. Trade Representative’s office fired another broadside Tuesday, accusing China of continuing a state-backed campaign of intellectual-property theft. For his part, Trump effectively blamed the Fed again for the current market turmoil, describing the central bank as a “problem” and pressing for lower interest rates.
In the credit market, premiums on U.S. investment grade bonds have surged over the past two weeks, reaching the highest since 2016. Fed Chairman Jerome Powell said last week that spreads “have been very tight” and can sometimes jump when they get so low. “That can have negative effects,” he said. The cost of insuring government and corporate bonds against default in the Asia ex-Japan region rose to the highest since April 2017.
The sell-off in momentum stocks continued a slump that began last month, with tech hardware the worst performing group in the S&P 500. Apple has plunged about 24 percent from its recent October peak on concerns that demand for the company’s iPhones has slowed. Also hitting U.S. stocks, Target Corp. had a disappointing sales forecast.
“This day was ultimately, unfortunately, coming -- and we may not be through the market volatility because we’re still not at a ‘fair value’ for the equity market,” Joe Davis, global chief economist at Vanguard Group Inc., said on Bloomberg Television. “We remain guarded in our return expectations,” with prospects for a “bumpy ride over the next several months,” he said.
Elsewhere, European shares fell to the lowest since December 2016. Bitcoin extended its recent sell-off.
Japan’s Topix index fell 1 percent as of 10:45 a.m. in Tokyo. Australia’s S&P/ASX 200 Index fell 0.8 percent. South Korea’s Kospi index lost 1 percent. Hong Kong’s Hang Seng Index lost 0.5 percent. S&P 500 futures rose 0.3 percent. The S&P 500 declined 1.8 percent. The MSCI Asia Pacific Index fell 0.9 percent.
The Japanese yen was steady at 112.76 per dollar. The offshore yuan traded at 6.9461 per dollar. The Bloomberg Dollar Spot Index was stable after gaining 0.5 percent. The euro traded at $1.1371. The British pound was at $1.2785.
The yield on 10-year Treasuries nudged higher to 3.07 percent, remaining near the lowest since September.
West Texas Intermediate crude recovered 1.4 percent to $54.17 a barrel after sliding 6.6 percent to the lowest since October 2017. Gold fell 0.1 percent to $1,221.03 an ounce.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.