(Times Of Update) — Asian stocks were set to fall on Thursday after a weak Treasury auction dealt another blow to sentiment on Wall Street.
Times Of Update’s most read articles
Futures for Japan, Australia and Hong Kong fell, while the index of U.S.-listed Chinese shares slipped 1.5%. The S&P 500 and the tech-heavy Nasdaq 100 both declined, reversing early gains that had been initially supported by dovish signals from the Bank of Japan. U.S. stock contracts also fell.
Japan’s central bank said on Wednesday it would not raise interest rates if markets were volatile, sending the yen into further weakness. The Japanese currency strengthened slightly on Thursday after falling 1.6% against the dollar on Wednesday.
Australian and New Zealand bonds fell in early trading after a slide in Treasuries on Wednesday, which partly reflected weak demand for the 10-year auction. The 10-year yield rose five basis points to 3.94%. Treasuries also came under pressure, with 17 investment-grade companies bidding $31.8 billion of debt, the largest amount of investment-grade U.S. issuance this year.
The auction outcome is “consistent with our view that we are on the verge of a continued correction higher in short-term yields,” said Zachary Griffiths, head of U.S. macro and investment grade strategy at CreditSights. “The repricing that followed what was really just a moderately weak jobs report seems way overblown.”
The sharp decline in the yen on Wednesday had repercussions on the foreign exchange markets. The Mexican peso benefited, gaining 1.5% against the dollar. The Indonesian rupiah and the Brazilian real also gained against the dollar on Wednesday.
The end of the carry trade triggered by the BOJ’s aggressive stance last week, which supported the yen, has since eased, according to Quincy Krosby of LPL Financial.
“Global markets breathed a sigh of relief as the unwinding speed eased, but the yen’s relationship with the dollar is also a key part of the carry trade calculus,” she noted. “A weaker dollar, fueled by market perceptions that the Fed will soon begin an easing cycle, should help support a stronger yen, which is negative for the trade.”
US Markets
After gaining nearly 2% in early trading, the S&P 500 closed down 0.8%. Nvidia Corp. led the losses among mega-caps. Super Micro Computer Inc. fell 20% on disappointing results. In late trading, Warner Bros. Discovery Inc., the parent company of CNN and TNT, plunged after taking a $9.1 billion writedown of its traditional television networks.
Earlier gains in stocks were fueled by reassurances from Japan after the country’s stock market swung wildly over the past week. Those moves were compounded by expectations that the Fed would cut rates more aggressively, prompting traders to quickly unwind once-popular yen-funded carry trades — including crowded positions in U.S. technology stocks.
Markets have been in free fall since last week’s economic data fueled concerns…
Discover more from The Times Of Update
Subscribe to get the latest posts sent to your email.
