(Bloomberg) — Stocks fell in Asia after concern about quickening inflation and monetary tightening again hurt Treasuries and U.S. shares.
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Equities slid in Japan and South Korea, which along with China are among the few markets open Friday amid Easter holidays. The technology sector led a Wall Street retreat Thursday that also saw Chinese shares traded in the U.S. sink.
Treasury yields surged on higher U.S. import prices and comments from Federal Reserve official John Williams that a half-percentage point interest-rate hike is a “reasonable option.” Treasury markets are shut for Good Friday. The dollar rose against all its Group-of-10 peers, with the yen among the weakest performers.
In contrast to the U.S. and many other economies, China appears set to further loosen policy to help an economy hit by Covid lockdowns. The central bank is forecast to cut a key policy rate Friday and may inject more liquidity.
Oil’s biggest weekly rally this month underlined global price pressures. Crude was bolstered by a report saying the European Union is moving toward adopting a phased ban on imports from Russian due to the war in Ukraine.
The rise in bond yields put both gold and Bitcoin on the back foot. The world’s largest cryptocurrency slipped to about $40,000.
The gyrations in bond markets remain center stage for investors, reflecting the ebb and flow of concern over when inflation will peak and the potential economic damage from tighter monetary policy across much of the world.
“We don’t think there’s going to be a recession,” Julian Emanuel, chief equity strategist at Evercore ISI, said in an interview on Bloomberg Television. “We don’t think the Fed is going to break the glass. But the problem is investors aren’t in that mindset quite yet.”
In Europe, policy makers are forming a consensus around raising rates in the third quarter to tackle record inflation, according to people familiar with the matter. The European Central Bank’s first hike in borrowing costs in more than a decade is expected to be by 25 basis points.
Musk, Twitter
Meanwhile, Twitter Inc. closed lower, whipsawed by billionaire Elon Musk’s offer to buy the social-media giant. The firm is said to be considering adopting a measure that would protect it from hostile acquisition bids.
Traders at Wall Street’s biggest investment banks had a better-than-expected quarter as the war in Ukraine compounded volatility. But questions are emerging about future earnings growth as fears of recession creep in.
“No one ever suggested that when the Fed begins raising rates that the market sells off dramatically,” Quincy Krosby, chief equity strategist at Lpl Financial, said on Bloomberg Television. “It doesn’t. The market can do very well. This time around you’ve got quantitative tightening with it, the complete opposite of the flood of liquidity. It makes a big difference.”
Some of the main moves in markets:
Stocks
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The S&P 500 fell 1.2% Thursday
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The Nasdaq 100 fell 2.3% Thursday
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Japan’s Topix index lost 1.3% as of 9:13 a.m. in Tokyo.
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South Korea’s Kospi index slipped 1%
Currencies
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The Bloomberg Dollar Spot Index rose 0.5% Thursday
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The euro dropped 0.1% to $1.0816
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The yen declined 0.3% to 126.21 per dollar
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The offshore yuan was at 6.3900 per dollar
Bonds
Commodities
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West Texas Intermediate crude rose 2.6% to $106.95 a barrel Thursday
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Gold was at $1,973.18 an ounce
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Read More:Stocks Sag on Inflation Risk; China Easing Awaited: Markets Wrap
2022-04-15 00:27:43
