Asian Stocks Drop, Bonds Rally on US Economic Data: Markets Wrap

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(Bloomberg) — Stocks in Asia fell at the open after another disappointing US consumer confidence reading fueled concern about the health of the world’s largest economy. Treasuries edged up after 10-year yields dropped to their lowest levels this year.

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A gauge of the region’s stocks dropped for a third day while futures pointed to a gain in Hong Kong, after tech shares slid Tuesday. The yen climbed to its highest level in more than four months on haven demand and speculation that the Bank of Japan will continue on its rate hike path. The S&P 500 closed at a five-week low and a gauge of megacaps extended a plunge from its peak to more than 10%.

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US consumer confidence fell the most since August 2021 on concerns about the outlook for the broader economy. The data followed recent disappointments on the retail, services and housing fronts. That’s prompted traders to boost their bets on Federal Reserve rate cuts this year even as inflation pressures seem to be intensifying. 

“The dominant theme is growing skepticism about the strength of the US economy,” said Alvin Tan, Head of Asia FX Strategy at RBC Capital Markets. The market is now pricing more than 50 basis points of Fed cuts by year-end, he said.

An index of US-listed Chinese shares rose 0.6% after plummeting 5.2% on Monday. President Donald Trump’s move to further decouple economic ties between the two nations has rattled global investors who had bet on a sustained rebound in Chinese stocks.

The yield on 10-year Treasuries fell 1 basis point after a 11-basis point move overnight. Yields on Australian and Japanese bonds also fell in early trading on Wednesday. Money markets are now pricing in more than two quarter-point reductions by the Fed in 2025. A dollar gauge slid 0.1%.

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Copper climbed after President Donald Trump signed an executive action directing the Commerce Department to examine possible tariffs on the metal. 

Investors are awaiting this week’s reading on prices. The Fed’s preferred inflation metric — the core personal consumption expenditures price index — is expected to cool to the slowest pace since June. 

“Investors should keep an eye on this week’s PCE report,” said Kenwell. “It will give another clue as to how consumers are feeling about their purchasing power. An in-line or lower reading may act as a relief catalyst for consumers and investors alike.”

Before that, traders will be wading through Nvidia’s earnings on Wednesday, the most closely watched barometer of the Artificial Intelligence boom. They will arrive at a critical juncture, with US stocks vulnerable from a technical and systematic standpoint. Nvidia Corp.’s shares slid 2.8%.

In other markets, oil in New York steadied after sinking back into the $60s-a-barrel range as a souring economic outlook threatened prospects for energy demand. Gold retreated while Bitcoin fell in early Wednesday trading, extending a 6% slump overnight. 

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Key events this week:

• US new home sales, Wednesday
• Nvidia earnings, Wednesday
• Fed’s Raphael Bostic speaks, Wednesday
• Eurozone consumer confidence, Thursday
• US GDP, durable goods, initial jobless claims, Thursday
• Fed’s Jeff Schmid, Beth Hammack, Patrick Harker, Michael Barr, Michelle Bowman speak, Thursday
• Japan Tokyo CPI, industrial production, retail sales, Friday
• US PCE inflation, income and spending, Friday
• Fed’s Austan Goolsbee speaks, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.3% as of 9:22 a.m. Tokyo time
• Hang Seng futures rose 0.6%
• Japan’s Topix fell 0.5%
• Australia’s S&P/ASX 200 fell 0.3%
• Euro Stoxx 50 futures fell 0.1%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.1% to $1.0525
• The Japanese yen rose 0.1% to 148.81 per dollar
• The offshore yuan was little changed at 7.2508 per dollar

Cryptocurrencies

• Bitcoin fell 0.6% to $88,197.43
• Ether fell 1.2% to $2,481.5

Bonds

• The yield on 10-year Treasuries was little changed at 4.29%
• Australia’s 10-year yield declined four basis points to 4.36%

Commodities

• West Texas Intermediate crude rose 0.3% to $69.16 a barrel
• Spot gold rose 0.4% to $2,925.42 an ounce

This story was produced with the assistance of Bloomberg Automation.

—With assistance from Rita Nazareth, Mia Glass and Rob Verdonck.

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