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Asia Stocks Drop With U.S. Futures; Havens Gain: Markets Wrap

Asian stocks and U.S. equity futures dropped, while the yen and Treasuries advanced, as optimism over policy stimulus gave way to recovery concerns caused by rising infection numbers in some locations.
Bloomberg
By Bloomberg
18 Jun
Asian Markets Continue To Fall on Fears Of China Slowdown Pedestrians are seen reflected in an electronic screen showing global stock market information on the street in Tokyo. (Photo by Chris McGrath/Getty Images) Photographer: Chris McGrath/Getty Images AsiaPac

Shares fell in Japan, Australia and Hong Kong as the global equity rally seen earlier this week continued to show signs of fatigue. S&P 500 Index futures fell after the index swung between gains and losses for most of Wednesday on light volume before closing in the red. The yuan slipped along with Chinese bond yields after China’s central bank cut a money-market interest rate and injected cash.

The longer the rally, the more S&P 500 stocks move opposite to dollar

“The narrative around policy stimulus and better economic data seems to be losing its sway,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.

Australia’s dollar fell after the country reported a much bigger decline in employment than forecast for May, with the unemployment rate surging almost a percentage point.

On the virus front, Texas reported an 11% surge in hospitalizations, the biggest 24-hour increase since June 4. Brazil registered a record 34,918 new infections, while China is escalating containment measures in Beijing including canceling flights.

The thin volume in U.S. equities on Wednesday exacerbated swings, including a drop that began around the time newspapers published summaries of John Bolton’s critical book about President Donald Trump.

Elsewhere, crude oil futures declined after two sessions of gains.

These are some key events coming up:

  • Policy decisions from the Bank of England and the Swiss National Bank are due on Thursday.

These are some of the main moves in markets:

Stocks

  • Futures on the S&P 500 retreated 1% as of 9:25 a.m. in Tokyo. The index fell 0.4% Wednesday.
  • Japan’s Topix index slid 0.9%.
  • Hong Kong’s Hang Seng index fell 0.4%.
  • South Korea’s Kospi lost 0.4%.
  • Australia’s S&P/ASX 200 Index declined 1.2%.

Currencies

  • The yen was at 106.76 per dollar, up 0.2%.
  • The offshore yuan was at 7.0845 per dollar, down 0.1%.
  • The euro bought $1.1239, little changed.

Bonds

  • The yield on 10-year Treasury yields fell four basis point to 0.70%.
  • Australia’s 10-year yield fell four basis points to 0.88%.

Commodities

  • West Texas Intermediate crude oil retreated 1.5% to $37.39 a barrel.
  • Gold was at $1,728.26 an ounce.

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