Asia stocks eye jump in yields, hawkish comments: Markets wrap
PremiumFutures were little changed in Japan, where stocks may find some support from a sinking yen
Stocks in Asia are poised to open steady Thursday as central banks amplify hawkish messages in their quest to rein in inflation and JPMorgan Chase & Co.’s Jamie Dimon sounded alarm bells on the economy. Treasury yields and the dollar advanced.
Futures were little changed in Japan, where stocks may find some support from a sinking yen. They fell in Australia and Hong Kong. US contracts were stable in early Asian trading after stocks dropped on Wall Street. Data showed an unexpected advance in US manufacturing activity as well as exceptionally high job openings, fueling concern the Federal Reserve will need to get more restrictive to slow runaway price gains.
The yield on 10-year Treasuries spiked higher as traders raised bets on the path for rate hikes and the Fed started its balance-sheet reduction process. Oil hovered near $115 a barrel ahead of an OPEC+ meeting to discuss supply policy.
Dimon warned investors to prepare for an economic “hurricane." In contrast, JPMorgan’s bullish strategist Marko Kolanovic expects stocks to rebound by the end of the year, underscoring the increasing debate as markets are buffeted by challenges from tightening monetary policy to the war in Ukraine.
The strong US data landed in a market where investors are on edge over whether the Fed’s tighter policies will induce a recession. The Bank of Canada raised its overnight rate by a half percentage point, as expected, and warned that it may act “more forcefully" if needed to tackle inflation.
A chorus of Fed officials has fallen behind calls to keep hiking rates to counter price pressures. Mary Daly of the San Francisco Fed and her more hawkish colleague James Bullard of St. Louis both backed a plan to raise rates by 50 basis points this month, while Richmond’s Thomas Barkin said it made “perfect sense" to tighten policy.
“We now find ourselves in a little bit more no man’s land," Greg Boutle, US head of equity and derivative strategy at BNP Paribas, said on Bloomberg TV. “We are in this kind of a bear market environment yet we haven’t seen recession manifest in a macro data yet. So we still think there is a path for the US economy to have a soft rather than a hard landing."
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