Asian stocks drift lower with US equity futures: markets wrap
Asian stocks and US equity futures drifted lower on Thursday, with moves of less than 1% in key indexes. The dollar edged higher in subdued trading that saw major currencies confined to narrow ranges.
Lacklustre trading in Asia contrasted with gains overnight on Wall Street that pushed US tech shares into a bull market amid bets that a peak in interest rates is near and bank turmoil will continue to ease.
A gauge of Asia shares fell about 0.5%, with slightly larger declines in Japanese and Chinese indexes while the Australian and South Korean markets eked out increases.
An initial advance in Hong Kong-listed tech companies fizzled as a rally in Alibaba Group Holding evaporated. Chief executive Daniel Zhang said the company would consider gradually giving up control of some of its main businesses. His short briefing on Thursday came after an overhaul announced earlier in the week that sparked a 12% rally in the stock on Wednesday.
Contracts for the S&P 500 were down about 0.1% following a gain of 1.4% for the index on Wednesday. Those for the Nasdaq 100 fell 0.2% after a 1.9% jump in the gauge, which cemented its 20% rebound from a low in December.
The tech-heavy index, which includes Apple, Microsoft, and Amazon.com, closed at the highest level since August in a sign investors are preparing for the Federal Reserve to end its interest rate hiking cycle and potentially pivot to looser policy later this year.
Treasuries were flat across the curve extending muted action on Wednesday when the 10-year benchmark moved by the smallest margin in more than a month. Australian and New Zealand government bond yields were moderately higher.
The dollar rose fractionally in Asia on Thursday after strengthening as investors digested the latest remarks by Fed officials and looked ahead to core PCE data for clues on the Fed’s next move. Investors now expect US rates to sit around 4.3% by the end of the year, around 70 basis points lower than the current level.
“The Fed remains in a very difficult position,” wrote Chris Senyek of Wolfe Research in a note. “With banks stabilising, inflation still way above target, the labour market still historically strong, and the Fed desperately needing to rebuild credibility, our sense is that the FOMC will hike by 25 basis points on May 3.”
A busy day of Chinese earnings includes Agricultural Bank of China, Industrial & Commercial Bank of China, Bank of China, Bank of Communications, Air China, Country Garden Holdings, Citic Securities and Great Wall Motor.
“Analysts are revising up their earnings,” said Audrey Goh, senior cross-asset strategist for Standard Chartered Wealth Management, speaking about Chinese equities on Bloomberg Television. “Consumption, fixed asset investments as well as even the distressed property sector are starting to show some signs of life and recovery.”
Elsewhere in markets, oil held its first drop in three sessions as lagging US diesel demand overshadowed a disruption to shipments from Turkey. Gold fell for a second day and Bitcoin hovered above $28,000. BM/DM