Asian stocks drop as S&P500 Futures slide to 4,470, US Treasury bond yields refresh three-month high
- Market sentiment worsens as China-linked fears escalate, economic slowdown looms.
- S&P500 Futures drop for third consecutive day after Wall Street’s downbeat close.
- US 10-year, two-year Treasury bond yields cheer hawkish Fed Minutes, market’s rush towards risk-safety by refreshing multi-day top.
- Asian equities also portray risk-off mood led by Hang Seng’s 3.25% intraday loss.
The risk profile remains downbeat during early Thursday as market players sense an economic slowdown amid softer statistics from top-tier economies and due to geopolitical tensions. Adding strength to the sour sentiment are hawkish concerns of the leading central banks.
While portraying the mood, S&P500 Futures dropped for the third consecutive day to 4,4712, down 0.30% intraday, whereas the US 10-year and two-year Treasury bond yields jump to a fresh three-month high of around 3.96% and 4.97% in that order.
Additionally, the MSCI’s index of the Asia-Pacific shares, ex-Japan, extends the previous day’s pullback from a two-week high, down 1.60% intraday by the press time of early Thursday in Europe.
It should be noted that Japan’s Nikkei 225 drops 1.50% in a day while Hong Kong’s Hang Seng gains major attention by declining nearly 3.5% intraday at the latest. In doing so, the equities in Hong Kong fail to justify the Chinese influx of funds amid fears of a recession in Beijing.
That said, a jump in Chinese investor buying Hong Kong and Macau wealth products join pessimism about China’s top-tier housing players like Shimao Group, as well as the government-backed Sino-Ocean Group, to amplify economic fears about the world’s biggest industrial player China.
Elsewhere, tit-for-tat trade war measures by the US and China join the hawkish Federal Open Market Committee (FOMC) Minutes for the June meeting to weigh on the sentiment.
It’s worth noting that downbeat US Factory Orders failed to push back the market’s hawkish Fed bets surrounding a 0.25% rate hike in July. On the same line, softer statistics from Europe and the UK also couldn’t tame expectations of witnessing “higher for longer rates” at the European Central Bank (ECB) and the Bank of England (BoE).
With this, stocks in China, Australia and New Zealand see the red whereas equities from Indonesia and India struggle to fight back the bears. It should be observed that Australia’s upbeat trade numbers for May allowed Aussie equity sellers to take a breather.
Looking ahead, today’s US ISM Services PMI and ADP Employment Change for June, as well as China headlines and recession woes, will be crucial for clear market directions. Additionally, a likely deterioration in the Eurozone Retail Sales for May should also be watched carefully for extra guidance.
Also read: Forex Today: US Dollar shows positive signs, attention turns to US labor market