Asian equities were mixed Tuesday as a rally in global stocks paused and US equities pulled back short of entering a bull market. The dollar and Treasuries were little changed.
Shares were flat in Japan and fluctuated in a narrow range in Hong Kong, while Australian stocks declined ahead of the central bank’s interest rate decision later in the day. Contracts for US benchmarks marginally lower after tech shares led the S&P 500 down Monday, with Apple Inc. wiping out gains of as much as 2% in anticipation of a new mixed-reality headset.
Australian government bond yields and the currency also fell slightly as investors awaited the Reserve Bank of Australia’s rate announcement. The consensus view is for policymakers to stand pat, though some see the risk of a hike.
If the RBA raises benchmark borrowing costs, “as well as the knee jerk selloff in rates and support for the Australian dollar this should elicit, much will turn on the accompanying statement and whether the Board thinks further tightening is still likely to be required,” Ray Attrill, head of foreign exchange strategy at National Australia Bank Ltd., wrote in a note.
The dollar and the yen were steady. The yield on the 10-year Treasury was little changed for a second day. Shorter-end US rates edged up after inching down Monday when a report showed the US services sector nearly stagnated in May, giving traders pause to rethink the Federal Reserve’s interest-rate hike path.
Oil fell as traders weighed the outlook for supply and demand following Saudi Arabia’s pledge for extra supply cuts.
Traders in Asia will also be watching the release of consumer price index data in the Philippines, Thailand and Taiwan for fresh indications of the impact of the global inflationary cycle.
Treasury on Monday began its bill issuance flood that saw buyers storming into the upsized three- and six-month auctions, a move that many have expected will drain liquidity from the system.
Any move by the government or the Fed that can risk liquidity in the system “is something that will probably keep us in a range bound mode until we see where it all lands, including the Fed’s final decision on rates,” Sylvia Jablonski, CEO and chief investment officer at Defiance ETF, said on Bloomberg Television.
Elsewhere, gold was steady on Tuesday after advancing 0.7% in the previous session.
Key events this week:
- Rate decisions in Australia, Poland, Tuesday
- China forex reserves, trade, Wednesday
- US trade, consumer credit, Wednesday
- Canada rate decision, Wednesday
- EIA crude oil inventory data, Wednesday
- Eurozone GDP, Thursday
- Rate decisions in India, Peru, Thursday
- Japan GDP, Thursday
- US wholesale inventories, initial jobless claims, Thursday
- China PPI, CPI, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 10:38 a.m. Tokyo time. The S&P 500 fell 0.2%
- Nasdaq 100 futures fell 0.1%. The Nasdaq 100 was little changed
- Japan’s Topix index was little changed
- Hong Kong’s Hang Seng Index fell 0.1%
- China’s Shanghai Composite Index fell 0.1%
- Australia’s S&P/ASX 200 Index fell 0.7%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0715
- The Japanese yen was little changed at 139.61 per dollar
- The offshore yuan was little changed at 7.1257 per dollar
- The Australian dollar was little changed at $0.6615
Cryptocurrencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0715
- The Japanese yen was little changed at 139.62 per dollar
- The offshore yuan was little changed at 7.1259 per dollar
- The Australian dollar was little changed at $0.6615
Cryptocurrencies
- Bitcoin was little changed at $25,641.49
- Ether was little changed at $1,806.17
Bonds
- The yield on 10-year Treasuries was little changed at 3.69%
- Japan’s 10-year yield declined one basis point to 0.425%
- Australia’s 10-year yield declined four basis points to 3.74%
Commodities
- West Texas Intermediate crude fell 0.6% to $71.73 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
--With assistance from Isabelle Lee, Vildana Hajric and Jason Scott.
