(Bloomberg) — European stocks looked likely to follow a sell-off in Asia as U.S. Treasury yields remained near this year’s high risk sentiment.
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Euro Stoxx 50 futures fell 0.4%, while US stock contracts also fell. The MSCI Asia Pacific Index fell to a three-week low, with stocks in South Korea and Japan bearing the brunt of the losses.
Global stock prices are heading for their worst week since mid-April as the latest comments from Federal Reserve officials revive doubts about the timing of the rate cut. Elevated bond yields have added to fears, with Treasuries falling over the curve last session on tepid demand for $44 billion in sales of seven-year securities.
Investors braced for a series of inflation reports from the US and Europe on Friday to refine their monetary policy outlook.
“The market has been captivated by the spirit of the bond market and higher yields,” said Tony Sycamore, market analyst at IG Australia Pty Ltd. “The focus has shifted to managing downside risks if we see US or European rates firmer than expected. inflation data tomorrow.”
Government bond yields fell in trading in Asia after 10-year yields rose six basis points in the previous session. The weak auction result raised fears that financing the US budget deficit will drive up interest rates at a time when the Fed is in no hurry to cut rates. Australian interest rates have risen.
A gauge of the strength of the dollar gained in the third session, hitting Asian currencies.
In Japan, the yen rose after weakening above 157.52 per dollar on Wednesday, falling through a level that had prompted the latest round of suspected action. Ten-year government bonds recovered from an earlier loss.
Elsewhere, China’s onshore yuan was little changed after falling to its lowest level since November on Wednesday. The Rand extended losses as South Africa’s electoral votes increase.
“Bond yields may rise primarily due to bond supply and the ongoing massive deficit – and not because of concerns about inflation or the strong economy,” said Eric Johnston of Cantor Fitzgerald.
In New Zealand, the new government made good on its election promise to cut taxes in its first budget, even as the Treasury forecast bigger deficits and a delayed return to surplus.
In the business world, Chinese authorities are poised to impose a record fine on PricewaterhouseCoopers LLP over its audit work for China Evergrande Group, people familiar with the matter said. Brookfield is in exclusive talks to acquire a majority stake in Neoen SA in a deal that values the French renewable energy developer at around €6.1 billion.
In the commodities sector, oil held steady after falling on Wednesday, as traders look to US inventory data and a weekend OPEC+ meeting for more clarity on the supply and demand outlook.
Main events this week:
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Economic confidence in the eurozone, unemployment, consumer confidence, Thursday
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US initial unemployment claims, GDP, Thursday
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The Fed’s John Williams and Lorie Logan will speak Thursday
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Unemployment in Japan, CPI in Tokyo, industrial production, retail sales, Friday
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China official manufacturing and non-manufacturing PMI, Friday
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Eurozone CPI, Friday
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US consumer income, spending, PCE deflator, Friday
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Raphael Bostic of the Fed will speak on Friday
Some of the major moves in the markets:
Shares
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S&P 500 futures fell 0.6% as of 2:23 p.m. Tokyo time
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Nasdaq 100 futures fell 0.7%
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Japan’s Topix fell 0.6%
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Australia’s S&P/ASX 200 fell 0.4%
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Hong Kong’s Hang Seng fell 1.4%
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The Shanghai Composite fell 0.6%
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Euro Stoxx 50 futures fell 0.4%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0791
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The Japanese yen rose 0.4% to 157.07 per dollar
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The offshore yuan was little changed at 7.2676 per dollar
Cryptocurrencies
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Bitcoin rose 0.9% to $68,010.32
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Ether rose 0.6% to $3,772.56
Bonds
Raw materials
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West Texas Intermediate crude fell 0.2% to $79.11 a barrel
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Gold fell 0.2% to $2,333.95 an ounce
This story was produced with the help of Bloomberg Automation.
–With help from Masaki Kondo.
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