Asia Stocks Erase Gain on China; Yen Swings on BOJ: Markets Wrap

Asia Stocks Erase Gain on China; Yen Swings on BOJ: Markets Wrap
Rob Verdonck and Tassia Sipahutar
·4 min read

(Bloomberg) -- A gauge of Asian equities gave up most of their advance as Chinese markets opened Friday, with Hong Kong-listed tech stocks leading the decliners. The yen fluctuated as the nominee to become Bank of Japan governor spoke in parliament.

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US share futures fell slightly after Wall Street benchmarks closed higher on Thursday in a volatile session as investors await inflation data for clues on the Federal Reserve’s rate-hike campaign.

Hong Kong’s Hang Seng Index slid as much as 1.3% while the market’s tech gauge fell slightly more. The Hang Seng dropped Thursday into a 10% correction from a peak in January.

Japanese markets are under the spotlight, with data Friday showing accelerating inflation as the government’s nominee to be the next central bank governor faced his first grilling in parliament.

The yen pared gains and swung to a small loss against the greenback as Kazuo Ueda told lawmakers he saw inflation peaking. He said the current policy easing as appropriate but added that the central bank could move toward normalization if stable 2% inflation comes into sight.

The dollar was little changed against most major currencies and Treasuries looked set to continue their advance into a third day.

A key US economic data awaits investors later Friday in the form of personal consumption expenditures — the Fed’s preferred price gauge. It’s expected to show acceleration, adding to a string of unfavorable figures that bolster the case for the central bank to hold rates at 5.25% for some time, according to Bloomberg Economics’ Anna Wong. The current benchmark sits in a range between 4.5% and 4.75%.

“Whatever happens, the dollar is very much in focus today - it’s likely to remain bid should PCE and inflation expectations move higher,” according to Matthew Simpson, an analyst at City Index.

Investors are caught between welcoming the evidence that the US economy remains on a stable footing and fearing that this resilience will provoke a stern reaction from policymakers, according to Michael Shaoul at Marketfield Asset Management,

Billionaire quant investor Cliff Asness warned that US stocks are vulnerable to a macro shock if inflation doesn’t stage a spirited decline as the market expects. JPMorgan Chase & Co.’s chief Jamie Dimon told CNBC there’s still a chance for a soft landing for the US economy, though “out in front of us there’s some scary stuff.”

Oil extended on Thursday’s advance, when it snapped its longest losing streak since December amid strength in commodity currencies and signs of appetite for risk taking.

Elsewhere, Bitcoin was on pace for its second monthly advance, breaking with stocks and other riskier assets that have slid amid renewed concern about rising interest rates. The crypto market’s rally recovers only a sliver of the ground lost last year, when prices tumbled and the collapse of the FTX exchange caused a pullback by investors.

Key events this week:

  • US PCE deflator, personal spending, new home sales, University of Michigan consumer sentiment, Friday

  • Russia’s invasion of Ukraine hits the one-year mark, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 0.1% as of 10:57 a.m. Tokyo time. The S&P 500 rose 0.5%

  • Nasdaq 100 futures fell 0.2%. The Nasdaq 100 rose 0.9%

  • Japan’s Topix rose 0.6%

  • Australia’s S&P/ASX 200 rose 0.3%

  • Hong Kong’s Hang Seng fell 1%

  • The Shanghai Composite fell 0.2%

  • Euro Stoxx 50 futures rose 0.4%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0602

  • The Japanese yen was little changed at 134.74 per dollar

  • The offshore yuan was little changed at 6.9215 per dollar

  • The Australian dollar rose 0.1% to $0.6818

Cryptocurrencies

  • Bitcoin rose 0.6% to $24,027.12

  • Ether rose 0.6% to $1,655.27

Bonds

  • The yield on 10-year Treasuries declined one basis point to 3.87%

  • Australia’s 10-year yield declined two basis points to 3.86%

Commodities

  • West Texas Intermediate crude rose 0.8% to $76.01 a barrel

  • Spot gold rose 0.2% to $1,825.99 an ounce

This story was produced with the assistance of Bloomberg Automation.

--With assistance from Rita Nazareth.

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