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.

Anil Panchal FXStreet

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.

Furthermore, the US Dollar Index (DXY) refresh the weekly high with a four-day uptrend while prices of the Gold and the WTI crude oil decline due to the risk aversion.

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

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

GBP/USD slides below 1.3250 after failing to break through 23.6% Fibo

The GBP/USD pair meets with a fresh supply during the Asian session on Wednesday and moves away from a nearly two-week high around the 1.3275 region, touched the previous day. Spot prices currently trade around the 1.3235 zone, down 0.20% for the day, as traders look to speeches from Bank of England Governor Andrew Bailey and Federal Reserve Chair Kevin Warsh for a fresh impetus.

EUR/USD stays offered, breaks below 1.1400…again

EUR/USD adds to Tuesday’s slight losses and drops below the 1.1400 yardstick in the latter part of Wednesday’s NA session. The pair’s decline comes in response to the persistent recovery in the US Dollar, which seems to have met extra support following the cautious tone from Fed’s Warsh in his comments at the ECB Forum.

Gold recovers but sellers hold the grip

Gold keeps the bullish performance in place on Wednesday, although is now giving away part of its earlier advance past the $4,100 mark per troy ounce. The precious metal’s marked rebound comes despite the US Dollar’s bid bias, higher US Treasury yields across the curve and positive headlines from the Middle East.

Dogecoin vs Shiba Inu: DOGE and SHIB start July with similar setups

The cryptocurrency market shows subtle signs of rebounding on Wednesday after facing intense headwinds over the past few weeks, largely attributed to geopolitical tensions, macroeconomic uncertainty and risk-averse sentiment. Dogecoin (DOGE) and Shiba Inu (SHIB) are holding above pivotal support levels at $0.0700 and $0.0000040, respectively, suggesting investors are ready to reengage.

Warsh stays on message as inflation remains the Fed's top priority

At the ECB Forum in Sintra, Fed Chair Kevin Warsh largely followed the script, offering little to change the market’s current view on monetary policy.

Just like Fed, is BoJ’s independence under threat?

When talking about central bank independence, most of the focus has been on Donald Trump’s pressure on the Federal Reserve. But a similar story, a quieter one for now, seems to be happening on the other side of the Pacific: Japan’s government may be testing the Bank of Japan’s independence.