(March 28): Stocks in Asia looked set to mostly open lower after a retreat in U.S. equities and an extension of the rally in developed-market sovereign bonds amid global growth concerns. The dollar rose.
Futures signaled a lower start for shares in Japan and Hong Kong, with Australia and China indicating a more muted open. The S&P 500 Index declined as a fall in oil prices weighed on energy producers. Treasury 10-year yields dropped to the lowest since December 2017, and rates on benchmark German Bunds sank further below zero after European Central Bank President Mario Draghi said an accommodative stance is still needed. The pound retreated as a U.K. Parliament vote showed no majority for any Brexit options.
Traders are snapping up bonds amid a return to low long-term rates around the world as investors fret that the slowing global expansion is deteriorating further despite signs of support from central banks. Recent data showed weakness from U.S. housing to retail sales and consumer sentiment, prompting a more dovish tone from the Federal Reserve. A closely watched segment of the yield curve inverted last week -- a gauge that’s served as a recession warning. Fed funds futures are now pricing in more than a quarter point of easing by the end of 2019.
“The performance of risk depends ultimately on what growth is,” Binky Chadha, Deutsche Bank AG’s chief global strategist, said on Bloomberg TV. “The current message from the last three weeks is easier monetary policies spook the markets about growth.”
Here are some key events coming up:
U.S.-China trade talks resume, with a cabinet-level American delegation due in China. Fed official Randal Quarles will speak Friday to the Shadow Open Market Committee on “Strategic Approaches to the Fed’s Balance Sheet and Communications.”
These are the main moves in markets:
Futures on Japan’s Nikkei 225 fell 0.9 percent in Singapore trading. Hang Seng Index futures earlier slid 0.1 percent. Futures on Australia’s S&P/ASX 200 Index were little changed. The S&P 500 Index fell 0.5 percent.
The yen was steady at 110.48 per dollar. The offshore yuan traded flat at 6.7378 per dollar. The Bloomberg Dollar Spot Index rose 0.2 percent. The euro bought $1.1252, up 0.1 percent. The British pound dipped to $1.3185.
The yield on 10-year Treasuries fell five basis points to 2.37 percent.
The Bloomberg Commodity Index declined 0.5 percent. West Texas Intermediate crude fell 0.9 percent to $59.41 a barrel. Gold rose 0.2 percent to $1,312.70 an ounce. - Bloomberg