(Bloomberg) — Asian equities dropped following tech-led declines on Wall Street as investors looked ahead to a week that includes Federal Reserve and Bank of Japan meetings.
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Stocks slipped in South Korea and Australia at the open. Japanese markets are shut for a holiday, with the central bank due to meet later this week. Contracts for US shares edged higher at the start of Asian hours.
Stocks fell in the US Friday, with a $4 trillion options maturity amplifying volatility, pushing up the equity-volatility VIX gauge from its lowest level since 2020. Big tech losses were led by Nvidia Corp. and Meta Platforms Inc. which both fell more than 3.5%. The S&P 500 erased its weekly gain, while the Nasdaq 100 slid 1.8%. The Fed’s policy decision is scheduled for Wednesday.
Oil gained for a third day, with Brent trading at around $94 per barrel. Traders will be watching Saudi Energy Minister Prince Abdulaziz bin Salman, who is due to address an industry conference on the kingdom’s crude policy and outlook on Monday.
Meanwhile, piles of derivatives contracts tied to stocks, index options and futures expired Friday — compelling traders to roll over their existing positions or to start new ones. This time, it coincided with the rebalancing of benchmark indexes including the S&P 500, another catalyst for more share transactions.
There is no cash trading of Treasuries in Asian hours Monday with Japan shut for a holiday. Treasury futures were little changed after yields rose Friday, with the rate-sensitive two-year rate closing above 5%. The greenback weakened against most of its G-10 peers while the Australian dollar and yen traded within narrow ranges.
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In Asia, distressed Chinese developer Country Garden Holdings Co. faces more tests Monday including a vote on stretching payment of a local bond by three years. Meanwhile, union workers at Chevron Corp.’s liquefied natural gas facilities in Western Australia continued rolling 24-hour stoppages for a second day, prolonging uncertainty over global supply of the fuel.
‘Sufficiently Hawkish’
US inflation expectations fell to the lowest in more than two years as consumers grew more optimistic about the economic outlook, data showed Friday. A measure of New York state factory activity unexpectedly expanded amid new orders.
A resilient US economy will prompt the Fed to pencil in one more interest-rate hike this year and stay at the peak level next year for longer than previously expected, according to economists surveyed by Bloomberg News.
“The Fed will be sufficiently hawkish so that markets don’t think it is done hiking,” said Win Thin, global head of currency strategy at Brown Brothers Harriman & Co., referring to this week’s US policy decision. Inflation continues to be elevated, the economy is still growing above trend and the labor market remains extremely tight so “simply put, current conditions warrant further tightening, period,” he said.
Key events this week:
Apple expected to release the iPhone’s latest operating system, iOS 17, Monday
Reserve Bank of Australia issues minutes of September’s policy meeting, Tuesday
OECD releases interim economic outlook report on the global economy, Tuesday
Eurozone CPI, Tuesday
Bloomberg Future of Finance Conference in Frankfurt, with speakers to include German Finance Minister Christian Lindner, Tuesday
ECB Executive Board member Frank Elderson speaks, Tuesday
Bank of Canada Deputy Governor Sharon Kozicki speaks, Tuesday
Japan trade, Wednesday
China loan prime rates, Wednesday
UK CPI, Wednesday
Federal Reserve policy meeting, followed by Chair Jerome Powell’s news conference, Wednesday
Bank of Canada issues summary of September’s policy meeting, Wednesday
Bank of England policy meeting, Thursday
ECB Executive Board member Isabel Schnabel chairs panel, Thursday
ECB chief economist Philip Lane speaks, Thursday
Japan CPI, PMIs, Friday
Bank of Japan rate decision, Friday
Australia PMIs, Friday
China’s Bund Summit, Friday
Eurozone S&P Global Eurozone PMIs, Friday
UK S&P Global / CIPS UK Manufacturing PMI, Friday
ECB Vice President Luis de Guindos speaks, Friday
US S&P Global Manufacturing PMI, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.2% as of 9:07 a.m. Tokyo time. The S&P 500 fell 1.2% on Friday
Nasdaq 100 futures rose 0.2%. The Nasdaq 100 fell 1.8%
Australia’s S&P/ASX 200 Index fell 0.1%
Hong Kong’s Hang Seng futures fell 0.6%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro rose 0.1% to $1.0671
The Japanese yen was little changed at 147.82 per dollar
The offshore yuan was little changed at 7.2737 per dollar
The Australian dollar rose 0.2% to $0.6442
Cryptocurrencies
Bitcoin rose 0.4% to $26,546.14
Ether rose 0.4% to $1,624.31
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
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