(June 4): Asia traders will look to see if stocks can stabilize Tuesday amid a technology rout that sank Nasdaq shares and a rally in Treasuries on growing conviction the Federal Reserve will cut interest rates.
Futures in Japan, Australia and Hong Kong showed modest gains as did U.S. contracts. The Nasdaq 100 Index tumbled more than 2% as the FAANG cohort of tech companies was said to potentially face antitrust probes, though declines were more muted on the S&P 500 Index. Two-year Treasury yields dropped to their lowest since 2017 after James Bullard became the first Fed board member to publicly call for a rate cut amid the trade war. The dollar fell against its peers.
There was no let-up in negativity as June began, after a brutal May that saw the value of most risk assets depleted. The latest signs of factory weakness in major economies weighed on investor sentiment already frayed by a worsening trade war. A measure of American manufacturing activity fell in May to the lowest since October 2016. Bank of America and Citigroup have lowered their U.S. corporate profit forecasts while pointing out the risk of a recession amid a trade war.
In the U.S., selling was heaviest in Facebook Inc., Amazon.com Inc., Alphabet Inc. and Apple Inc. as the companies appeared set to undergo antitrust probes after the U.S. Justice Department and the Federal Trade Commission agreed to split up oversight of technology giants.
Elsewhere, oil edged closer to a bear market as Wall Street banks raised the specter of a recession, while Saudi Arabia tried to assure investors that OPEC will avert a supply glut.
Here are some notable events coming up:
Tuesday sees the Reserve Bank of Australia policy meeting, with many expecting an interest-rate cut. China President Xi Jinping begins a two-day visit to Russia on Wednesday. Theresa May steps down on Friday as leader of the Conservative Party. Friday’s U.S. jobs report is projected to show payrolls rose by 190,000 in May, unemployment held at 3.6%, a 49-year low, and average hourly earnings growth sustained a 3.2% pace.
These are the main moves in markets:
Futures on the Nikkei 225 rose 0.4% in Singapore. Australia’s S&P/ASX 200 Index futures rose 0.3%. Hong Kong’s Hang Seng Index futures rose 0.4%. S&P 500 futures rose 0.2%. The S&P 500 Index declined 0.3% Monday.
The yen was steady at 108.05 per dollar after rising 0.2%. The yuan was at 6.9213 per dollar. Bloomberg Dollar Spot Index fell 0.4%. The euro held onto a 0.6% jump to trade at $1.1244.
The yield on 10-year Treasuries fell five basis points to 2.07%.
West Texas Intermediate crude tumbled 1.2% to $52.85 a barrel. Gold climbed 1.5% to $1,325.31 an ounce. - Bloomberg