(Bloomberg) — Asian stocks and European futures fell after a disappointing U.S. earnings report and Federal Reserve pushback.
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Australian and Japanese stocks also fell as the S&P 500 index fell 1.6%, its steepest decline since September. Aozora Bank fell 21% in Tokyo after announcing losses related to US commercial real estate, mirroring the woes of New York Community Bancorp in the US. Sumitomo Mitsui Financial Group reported an increase in third-quarter profit in its first financial results under its new CEO.
Contracts in Europe decreased. Deutsche Bank had a mixed quarter, BNP Paribas lowered its 2025 performance targets and Julius Baer Group announced it would exit its private debt business.
After the Fed’s decision, Chairman Jerome Powell said he thought it was unlikely the Fed would ease policy in March. In a sign that officials were in no hurry to cut rates, the central bank said it did not think it would be appropriate to lower the target range until there was greater confidence that inflation was on a sustained path towards 2%. He also said that
“Rate rates have been on the elevator going up, but now it’s down the stairs,” said Greg McBride, chief financial analyst at Bankrate. I’m still there. ”
China’s CSI 300 Index turned higher after four days of decline, while Hong Kong’s Hang Seng Index rose after two days of decline. The Caixin manufacturing PMI index reached expansion territory, as expected, and Beijing officials said the government would set a “reasonable” size for investment.
“The overall tone of fiscal policy still sounds quite cautious, with authorities likely focused on the sustainability of fiscal policy and the timing of spending,” said Xin Zhaopeng, senior China strategist at Australia New Zealand Banking Group. “It’s expensive.”
U.S. stock futures edged higher, with Nasdaq 100 futures outperforming, after big tech companies such as Microsoft and Alphabet led losses on Wall Street on Wednesday.
U.S. Treasuries held most of their gains in Asian trades. The yield on the 10-year Treasury note fell 12 basis points in premarket trading following Powell’s comments and renewed concerns about regional financial institutions. Measures of the dollar’s strength remained largely unchanged, with the yen the only G10 member to appreciate against the dollar.
“Given the mismatched expectations with the Fed, markets could see near-term volatility into the first quarter,” Raf Chaudhry, director of multi-asset investments at abrdn, said in a note.
A separate report from the ADP Institute said companies added 107,000 jobs in January, lower than expected, and wage growth for workers slowed.
PGIM Fixed Income’s Greg Peters said markets were too quick to downplay the threat posed by inflation following the “miraculous” decline in the central bank’s target. He worries that the most difficult part of the fight against inflation is yet to come, which could lead to further market volatility and alarm for bondholders betting on deep interest rate cuts this year. Suggests.
January barometer
Despite Wednesday’s decline, the S&P 500 and global stock indexes rose for the third consecutive month last month.
As January passes, another year passes. This is the theory behind the phenomenon known as the “January Barometer.” Wall Street folklore assumes that if stocks rise that month, they are likely to end the year even higher, and vice versa. Since 1938, the barometer has been accurate about 74% of the time, and rose 67% of the time in the following 11 months, according to the Stock Traders Almanac.
In commodities, crude oil was almost flat in Asian trading after capping a monthly rise for the first time since September amid tensions in the Middle East. Gold rose for the fourth day in a row.
This week’s main events include:
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Eurozone S&P World Manufacturing PMI, CPI, Unemployment Rate, Thursday
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US productivity, construction spending, ISM manufacturing, new unemployment claims, Thursday
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Apple, Amazon, Meta, Deutsche Bank, BNP Paribas earnings, Thursday
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Bank of England interest rate decision Thursday
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US employment statistics, University of Michigan consumer sentiment, factory orders, Friday
The main movements in the market are:
stock
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As of 6:37 a.m. London time, S&P 500 futures were up 0.1%.
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S&P/Australian Stock Exchange 200 futures little changed
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Hong Kong’s Hang Seng rose 0.5%.
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The Shanghai Composite fell 0.5%.
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Euro Stoxx50 futures fall 0.3%
currency
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Bloomberg Dollar Spot Index little changed
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The euro fell 0.2% to $1.0801.
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The Japanese yen remained almost unchanged at 146.86 yen to the dollar.
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The offshore yuan was little changed at 7.1914 yuan to the dollar.
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The British pound fell 0.1% to $1.2672.
cryptocurrency
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Bitcoin fell 0.7% to $42,154.32.
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Ether fell 0.4% to $2,269.05.
bond
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The 10-year Treasury yield rose 3 basis points to 3.94%.
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Japan’s 10-year bond yield fell 4 basis points to 0.690%.
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Australian 10-year bond yield unchanged at 4.01%
merchandise
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West Texas Intermediate crude rose 0.2% to $75.98 per barrel.
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Spot gold rose 0.2% to $2,044.06 an ounce.
This article was produced in partnership with Bloomberg Automation.
–With assistance from Yujing Liu.
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