(Bloomberg) — Stocks in Asia opened broadly lower Friday as traders reassessed the path forward for interest rates, while equities in Hong Kong braced for further gains on bullish corporate results.
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Shares in Japan and Australia fell, while futures for Hong Kong pointed to early gains after the Golden Dragon index of US-listed Chinese companies rose 2.5% Thursday in New York.
Alibaba Group Holding Ltd.’s US-traded shares rose 7.1%. Baidu Inc advanced after profits surpassed forecasts, while JD.com Inc also rose on robust results. The moves indicate the Hang Seng Index may touch a fresh nine-month high, compounding a Thursday advance that left the benchmark at the highest level since August last year.
US equity futures were little changed after the S&P 500 and Nasdaq 100 both fell 0.2%, easing back from their highs. The Dow Jones Industrial Average briefly surpassed 40,000 before retreating to close lower.
The downbeat day in US risk assets tracked a repricing of Federal Reserve rate cut expectations in the swaps market. Swaps traders had increased expectations from one cut in 2024 to two following Wednesday’s consumer price index data. On Thursday, those bets retreated, leaving just one cut fully priced in this year.
“There is a lot of leeway for the stock market if we do see a short-term pullback soon,” said Matt Maley at Miller Tabak + Co. “Put another way, the bulls are still fully in charge right now, and so it will take a significant reversal to stem the tide of the upside momentum.”
Treasuries opened little changed in Asian trading, while Australian and New Zealand yields climbed, tracking moves in US government bonds on Thursday. A gauge of dollar strength was flat Friday, though it’s on track for a weekly decline.
The yen was little changed early Friday after easing lower on Thursday. One former Bank of Japan chief economist suggested the central bank may raise interest rates three more times this year with the next move coming as early as June, given its easy policy settings.
In China, traders will be focused on signs of further support for the property sector, including a potential plan to clear excess inventory, according to media reports. Key officials will meet Friday morning to discuss such a plan, according to people with knowledge of the matter.
Higher for Longer
Three Federal Reserve officials said the central bank should keep borrowing costs high for longer as policymakers await more evidence inflation is easing, suggesting they’re not in a rush to cut interest rates.
Cleveland Fed President Loretta Mester, New York Fed President John Williams and Richmond Fed President Thomas Barkin, speaking separately Thursday, argued it may take longer for inflation to reach their 2% target.
Meantime, Jamie Dimon said he’s still more worried about inflation than markets appear to be. The JPMorgan Chase & Co. chief said significant price pressures are still influencing the US economy and may mean interest rates will be higher for longer.
“There are a lot of inflationary forces in front of us,” Dimon said in an interview on Bloomberg Television Thursday. “The underlying inflation may not go away the way people expect it to.”
In Asia, data set for release includes home prices, industrial output and retail sales for China, gross domestic product for Malaysia and Hong Kong, and exports for Singapore.
Commodities were broadly higher. West Texas Intermediate climbed early Friday, on pace for a third day of gains. Gold was slightly higher after a Thursday drop. Bitcoin traded above $65,000 after halting a decline in the prior session.
Key events this week:
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China property prices, retail sales, industrial production, Friday
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Eurozone CPI, Friday
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US Conf. Board leading index, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures were little changed as of 9:08 a.m. Tokyo time
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Hang Seng futures rose 1.2%
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Japan’s Topix fell 0.3%
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Australia’s S&P/ASX 200 fell 0.3%
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Euro Stoxx 50 futures fell 0.5%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0866
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The Japanese yen was little changed at 155.41 per dollar
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The offshore yuan was little changed at 7.2241 per dollar
Cryptocurrencies
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Bitcoin rose 0.1% to $65,356.99
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Ether rose 0.3% to $2,946.88
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
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