(Bloomberg) — Asian stocks traded within tight ranges on Wednesday after the S&P 500 nudged higher. The New Zealand dollar fell after the nation’s central bank said inflation expectations have declined.
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The currency slipped 0.8% after the Reserve Bank of New Zealand said the risks to the inflation outlook have become more balanced, citing how most measures of price expectations have fallen. It held policy rates as expected by economists.
Shares in Hong Kong and mainland China fluctuated at the open with eyes on the city’s budget due to be released Wednesday and a key political meeting in Beijing next week. Distressed Chinese developer Country Garden Holdings Co. slumped after receiving a winding-up petition in Hong Kong, also dragging industry peers lower.
Equity benchmarks slipped in Japan an Australia while those in South Korea climbed. Futures in the US were little changed even after consumer confidence fell for the first time in four months.
Investors in the US are now contending with an erosion in expectations for how much the Federal Reserve will lower rates and an onslaught of new corporate issuance that has given yield-seeking investors ample alternatives. Traders no longer expect the Fed to cut rates by more than 75 basis points in 2024, bringing their view in line with what policymakers have indicated as the likeliest outcome.
“We continue to recommend investors act soon to lock in currently attractive bond yields,” said Solita Marcelli at UBS Global Wealth Management. “We particularly like the five-year duration segment of quality bonds, as this part of the yield curve offers the best combination of high yields, stability, and sensitivity to falling interest-rate expectations.”
Traders refrained from making big bets ahead of Thursday’s inflation data and a parade of central bank speakers. Treasuries steadied in Asia after a $42 billion auction of seven-year notes and a heavy slate of new corporate debt. Wall Street saw another busy session of bond sales as issuers looked to borrow before key economic data later this week.
The global economy has a growing chance of pulling off a soft landing, finance chiefs said in a draft of the G-20’s closing statement at this week’s meeting in Brazil, citing faster-than-expected disinflation as one of the upside risks. Meanwhile, Goldman Sachs Group Inc. Chief Executive Officer David Solomon said softer spending by consumers calls into question expectations that the US economy will avoid a recession.
Fed Governor Michelle Bowman repeated her expectation that inflation will continue to decline further with interest rates held at their current level — but said it’s too soon to begin rate cuts — joining a raft of officials stressing they’re in no rush to lower borrowing costs.
In the corporate world, WuXi AppTec Co. has become the most-sold Chinese stock this year on fears of US sanctions, a reversal from last year when the shares of the biotech company were coveted by overseas investors. Shares of Chinese gaming company NetEase Inc. jumped in Hong Kong after its title was included in the latest list of approvals by Beijing.
Elsewhere, oil declined after a two-day gain as traders assessed a report showing higher US stockpiles and the odds that OPEC+ will extend supply cuts.
Key Events This Week:
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Eurozone economic confidence, consumer confidence, Wednesday
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US wholesale inventories, GDP, Wednesday
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Fed’s Raphael Bostic, Susan Collins and John Williams speak, Wednesday
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G-20 finance ministers and central bank chiefs meet in Sao Paulo, Wednesday through Thursday
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Germany CPI, unemployment, Thursday
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US consumer income, PCE deflator, initial jobless claims, Thursday
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Fed’s Austan Goolsbee, Raphael Bostic and Loretta Mester speak, Thursday
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China official PMI, Caixin manufacturing PMI, Friday
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Eurozone S&P Global Manufacturing PMI, CPI, unemployment, Friday
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BOE chief economist Huw Pill speaks, Friday
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US construction spending, ISM Manufacturing, University of Michigan consumer sentiment, Friday
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Fed’s Raphael Bostic and Mary Daly speak, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures were little changed as of 10:31 a.m. Tokyo time
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Japan’s Topix fell 0.2%
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Australia’s S&P/ASX 200 was little changed
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Hong Kong’s Hang Seng fell 0.1%
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The Shanghai Composite was little changed
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Euro Stoxx 50 futures were little changed
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Nasdaq 100 futures were little changed
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0841
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The Japanese yen was little changed at 150.44 per dollar
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The offshore yuan was little changed at 7.2129 per dollar
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The Australian dollar fell 0.1% to $0.6535
Cryptocurrencies
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Bitcoin rose 0.4% to $56,957.51
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Ether was little changed at $3,247.27
Bonds
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The yield on 10-year Treasuries declined two basis points to 4.29%
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Japan’s 10-year yield advanced one basis point to 0.695%
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Australia’s 10-year yield advanced four basis points to 4.17%
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rob Verdonck.
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