Stocks were mixed Tuesday and bonds were again on the back foot as traders calibrated risks from a global wave of monetary tightening.
Shares rose in Japan but dipped in China and Hong Kong. S&P 500 and Nasdaq 100 futures were little changed. Wall Street on Monday ended a choppy session in the red, dragged down by technology stocks such as Meta Platforms Inc.
Yields on Treasuries as well as bonds from Australia and New Zealand pushed higher amid a global bond selloff on the prospect of interest-rate hikes to fight inflation. Japan’s government bond yields are in sight of the upper limit of the central bank’s tolerance level, setting the stage for a potential intervention.
A dollar gauge was stable. Oil’s scorching rally took a breather, with attention turning to Iran nuclear talks that could lead to a resumption of official crude exports from the Persian Gulf producer. Bitcoin held gains near $44,000.
Investors are awaiting data Thursday expected to show stubbornly high U.S. inflation, which could inject further volatility into financial markets bracing for an aggressive Federal Reserve monetary tightening cycle.
“Markets will get used to the tightening regime at some point,” Chris Iggo, chief investment officer, core investments at AXA Investment Managers, wrote in a note. “The growth and earnings forecast revisions in the next few months will be key.”
Global stocks are down about 5% so far this year, while sovereign debt has retreated from Europe and the U.S. to Australia.
Investors are grappling with the likely broader impact of Fed policy, “particularly within credit markets,” Kristen Bitterly, head of North America investments at Citi Global Wealth, said on Bloomberg Television.
“That is what most investors are looking at right now in terms of what can actually interject volatility into the broader market,” she said.
Elsewhere, traders were monitoring a flurry of diplomacy involving the French, Russian, U.S. and German leaders, trying to assess if the tension over Ukraine can be defused.
Here are some events to watch this week:
- Earnings: AstraZeneca, Commonwealth Bank of Australia, GlaxoSmithKline, Pfizer, SoftBank Group, Toyota Motor, Twitter, Uber, Walt Disney
- Federal Reserve Bank of Cleveland President Loretta Mester speaks Wednesday
- U.K. Bank of England Governor Andrew Bailey speaks Thursday
- U.S. consumer price index, initial jobless claims Thursday
Some of the main moves in markets:
Stocks
- S&P 500 futures were steady as of 10:55 a.m. in Tokyo. The S&P 500 fell 0.4%
- Nasdaq 100 futures rose 0.1%. The Nasdaq 100 lost 0.8%
- Topix index rose 0.5%
- Australia’s S&P/ASX 200 Index rose 1%
- Kospi index added 0.7%
- Hang Seng Index fell 0.6%
- Shanghai Composite Index dropped 0.2%
Currencies
- The Japanese yen was at 115.28 per dollar
- The offshore yuan was at 6.3596 per dollar
- The Bloomberg Dollar Spot Index was steady
- The euro was little changed at $1.1437
Bonds
- The yield on 10-year Treasuries rose one basis point to 1.93%
- Australia’s 10-year bond yield rose seven basis points to 2.07%
Commodities
- West Texas Intermediate crude was at $91.10 a barrel
- Gold was at $1,821.98 an ounce
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