Stocks in Asia May Get Tailwind From US Rebound: Markets Wrap

(Bloomberg) – Stocks in Asia look set for a boost Wednesday from a bounce in US equities but the durability of the rebound is in doubt on ever-louder warnings about the risk of an economic downturn.

Equity futures rose for Japan and Australia and were steady for Hong Kong. US contracts wavered after the S&P 500 and Nasdaq 100 jumped over 2%. A gauge of Chinese shares traded in the US also rallied Tuesday.

Longer maturities led Treasuries lower, leaving the 10-year yield closer to 3.30%. The Federal Reserve’s aggressive monetary tightening to tame inflation and the attendant risk of recession continue to hang over the bond market.

The yen sank to a new 24-year low against the dollar, sapped by the stark contrast between ultra-loose Bank of Japan monetary policy and Fed hawkishness that’s helping to drive up the greenback.

Skepticism abounds about the equity rebound in a year of steep drops across global markets. Prognosticators from Morgan Stanley to Goldman Sachs Group Inc. warned stocks may face more losses amid a dimming economic outlook.

“The Fed has entered into a policy cocktail that we would describe as hammer time,” said Gene Tannuzzo, global head of fixed income at Columbia Threadneedle Investments, on Bloomberg Television. “You have to be planning defensively at this point. There are a lot of questions on all risk assets. “

Fed Bank of Richmond President Thomas Barkin said the central bank should raise rates as fast as it can without causing undue harm to financial markets or the economy.

A backdrop of tightening financial conditions led delegates including Tesla Chief Executive Officer Elon Musk to warn the US is heading towards a recession.

Elsewhere, crude oil held around $ 110 a barrel and gold was little changed. Bitcoin hovered above $ 20,000 as some calm returned to cryptocurrencies.

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What to watch this week:

  • Fed Chair Jerome Powell semi-annual Senate testimony, Wednesday
  • Bank of Japan April minutes, Wednesday
  • Powell US House testimony, Thursday
  • US initial jobless claims, Thursday
  • PMIs for Eurozone, France, Germany, UK, Australia, Thursday
  • ECB economic bulletin, Thursday
  • US University of Michigan consumer sentiment, Friday
  • RBA’s Lowe speaks on panel, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 0.1% as of 7:14 am in Tokyo. The S&P 500 rose 2.4%
  • Nasdaq 100 futures retreated 0.1%. The Nasdaq 100 rose 2.5%
  • Nikkei 225 futures rose 1%
  • Australia’s S&P / ASX 200 Index futures rose 0.7%
  • Hang Seng Index futures were steady

Currencies

  • The Bloomberg Dollar Spot Index was little changed
  • The euro was at $ 1.0535
  • The Japanese was at 136.57 per dollar
  • The offshore yuan was at 6.6904 per dollar

Bonds

  • The yield on 10-year Treasuries advanced five basis points to 3.27%

Commodities

  • West Texas Intermediate crude was at $ 109.46 a barrel
  • Gold was at 8 1,830.74 an ounce

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