An employee works at the Tokyo Stock Exchange, operated by Japan Exchange Group. (Photo: Toru Hanai/Bloomberg) Shares fell in Japan and Australia, while equities in Hong Kong and mainland China fluctuated. US futures edged higher after the S&P 500 declined 1.1% and the tech-heavy Nasdaq 100 fell 1.8%.
The knock to risk sentiment hinged on comments from four Fed officials who spoke at separate events on Wednesday and reinforced a shared message: the fight against inflation is not yet won. Fed-funds futures markets priced in higher rates, with some options traders betting the US policy benchmark will reach 6%.
“I don’t think the Fed will cut within this year,” Jun Bei Liu, portfolio manager at Tribeca Investment Partners, said on Bloomberg Television. “The Fed was behind the curve in terms of putting up their interest rate and they certainly are going to be very slow in cutting the interest rate.”
Fed Bank of New York president John Williams said prior Fed indications that would see rates rise to 5.1% remain accurate.
Treasury 10-year notes held the gains from a rally on Wednesday in the wake of a strong auction. Australian and New Zealand government bonds were largely unchanged. The index of the dollar and the yen were flat.
A 7.7% drop for Alphabet shares amplified the hit to tech stocks as investors showed concern that its new artificial intelligence chatbot Bard may yield inaccurate responses. Walt Disney Co shares surged in after-hours trading following fourth-quarter earnings that outpaced estimates. The company unveiled a dramatic restructuring that includes slashing 7,000 jobs as part of a $5.5-billion cost-cutting plan.
“We continue to expect market volatility ahead as news flow on earnings, inflation, the economy, and Fed bounces from bullish to bearish and back again,” wrote Stephen Auth, chief investment officer of equities at Federated Hermes.
Meanwhile, Turkey’s stock exchange suspended trading for the first time in 24 years following a selloff that erased billions of dollars from the value of its main equities gauge in the wake of two devastating earthquakes. Trading in Turkish equities, futures and option contracts will resume on 15 February.
Elsewhere, oil steadied during trading in Asia after rallying about 7% over the previous three sessions as investors assessed the latest commentary from Fed officials and mixed Energy Information Administration data. Gold was little changed. BM/DM