US, Europe Futures Retreat; Dollar with yields: Markets wrap

(Bloomberg) — U.S. and European stock markets fell along with Asian stocks on Tuesday as investors weighed the prospect of central banks tightening policy more than previously expected to curb inflation.

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The dollar rose against peers in the Group-of-10 currency basket as Treasury yields rose in Asia after trading closed for a US holiday on Monday.

Contracts for S&P 500 and Nasdaq 100 futures lost more than 0.3%, signaling further downward pressure on U.S. stocks after last week’s slide.

The MSCI Asia Pacific index fell 0.7%, with Hong Kong-listed technology stocks leading decliners. HSBC Holdings plc shares fell after the company beat profit forecasts for its fourth-quarter results.

Mainland China shares were volatile after the CSI 300 benchmark posted its best one-day gain since November on Monday, Goldman Sachs Group Inc. Strategists have said the country’s stocks could rise by a fifth this year from current levels.

Japanese 10-year yields briefly rose above the central bank’s 0.5% yield curve control target for the first time since January. Investors are ready to hear from Bank of Japan governor candidate Kazuo Ueda, who faces confirmation hearings in parliament on Friday.

Yields on policy-sensitive two-year US Treasuries were at their highest since November as traders awaited the release of the Federal Reserve’s preferred inflation measure, the PCE deflator, later this week.

“Some are focusing on US-China relations and pointing to upcoming meetings between the Chinese and Russians this week, repricing and increasing interest rate expectations that could eventually open the downside in equity markets,” Chris Weston, head of research at Pepperstone Group Ltd., wrote in a note.

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The benchmark two-year yield on New Zealand government bonds rose on Tuesday, while Australian yields were higher. Economists expect the Reserve Bank of New Zealand to raise its policy rate by 50 basis points on Wednesday.

Meanwhile, the economic data out so far “certainly puts a lot of cold water on the argument that the Federal Reserve could pause or cut rates soon,” Chuck Cumello, president and CEO of Essex Financial Services, told Bloomberg. Radio. “We’re in for a very volatile ride, and I think the market has finally woken up because prices are going to be high for a long time,” he said.

Elsewhere, oil trade was subdued as investors weighed the possibility of further monetary tightening against signs of improving Chinese demand. Gold changed little.

Highlights of this week:

  • Earnings for the week are scheduled for: Alibaba, Anglo American, AXA, BAE Systems, Baidu, BASF, Danone, Deutsche Telekom, Holcim, Home Depot, Hong Kong Exchanges & Clearing, Iberdrola, Lloyds Banking Group, Moderna, Munich Re, Newmont, Nvidia, Rio Tinto, Walmart, Warner Bros. Discovery

  • PMIs for Japan, Eurozone, UK, US, Tuesday

  • US existing home sales, Tuesday

  • US MBA mortgage applications, Wednesday

  • Federal Reserve Minutes Jan. 31-Feb. 1 Policy meeting, Wednesday

  • Eurozone CBI, Thursday

  • US GDP, Initial Jobless Claims, Thursday

  • Atlanta Fed President Raphael Bostick speaks Thursday

  • G-20 finance ministers and central bank governors meet in India on Thursday-Friday

  • Japan CBI, Friday

  • BOJ governor-nominee Kazuo Uida appeared in Japan’s lower house on Friday

Some key moves in the markets as of 6:47 am London time:

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  • S&P 500 futures fell 0.4%

  • Japan’s TOPICS fell 0.1%

  • Hong Kong’s Hang Seng fell 1.3%

  • The Shanghai composite rose 0.4%

  • Euro stocks 50 futures fell 0.2%


  • The Bloomberg Dollar Spot Index rose 0.1%

  • The euro fell 0.1% to $1.0671

  • The Japanese yen fell 0.2% to 134.46 per dollar

  • The offshore yuan fell 0.2% to 6.8760 per dollar

  • The British pound fell 0.1% to $1.2027


  • Bitcoin rose 0.8% to $24,975.46

  • Ether rose 0.1% to $1,703.22


  • The yield on 10-year Treasuries rose three basis points to 3.85%

  • Japan’s 10-year yield was little changed at 0.50%

  • Australia’s 10-year yield was little changed at 3.81%


  • West Texas Intermediate crude was little changed

  • Spot gold was down 0.1% at $1,838.69 an ounce

This story was produced with the help of Bloomberg Automation.

–With help from Akshay Chinchalkar.

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