(Bloomberg) — Asian stocks fell and the region's currencies weakened against the dollar as Chinese economic indicators put further pressure on sentiment.
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Stocks from Hong Kong to Japan and South Korea fell, with the MSCI Asia-Pacific Index suffering its biggest decline in three months. U.S. stock futures contracts were firmer in Asian trading after the S&P 500 erased earlier gains and fell more than 1% in a choppy session.
A number of Chinese economic indicators were mixed, with first-quarter growth beating market expectations and raising hopes that the government could meet its ambitious annual targets. The country's retail sales and industrial output were both lower than expected.
The offshore yuan continued to fall in the morning as officials unexpectedly weakened their defenses as the dollar's recovery and worsening sentiment put pressure on policy red lines.
Elsewhere, indicators of emerging market currencies fell to year-to-date lows.
“It seems like a mixed bag,” said Vaisaan Lin, managing director of Union Bancare Prive. “While GDP growth in the first quarter was clearly better than expected, weaker retail sales and industrial production in March would raise some concerns about the second quarter.”
U.S. Treasuries were firmer on Tuesday after better-than-expected retail sales data pushed bond yields to year-to-date highs. Oil prices rose as tensions in the Middle East rose as Israel vowed to respond to an unprecedented attack by Iran.
“Stocks have broken the uptrend and are starting to fall back,'' Piper Sandler's Craig Johnson said. “We expect interest rates to remain high for an extended period of time. A more cautious and tactical approach is favored as earnings season begins.”
Elsewhere, the Japanese yen remains under pressure after soaring overnight to a 34-year low against the dollar. There remains a growing risk that Tokyo authorities could intervene in the market to stem the fall, after Japan's finance minister warned that it was ready to take all measures in the foreign exchange market if necessary. .
fear gauge
The premium for one-month put options, which protect against a decline in U.S. stocks, rose to the highest level since October, increasing volatility. The VIX, Wall Street's “fear index,” has reached unprecedented levels this year. The S&P 500 index fell below 5,100, its lowest level in about two months. The tech-heavy Nasdaq 100 fell more than 1.5%. Both metrics topped his 50-day moving average. This was considered a bearish signal by some chartists. Banks outperformed with Goldman Sachs Group Inc.'s surprise profit.
The yield on the 10-year Treasury note rose sharply on Monday, with the yield on the two-year note rising to nearly 5%. The entry of JPMorgan Chase & Co. and Wells Fargo & Co. into the U.S. high-grade bond market has also put pressure on bond prices, making them the first stocks likely to see a surge of bond selling by banks after the earnings call.
U.S. retail sales rose more than expected in March and was revised upward for the previous month, demonstrating the resilience of consumer demand that continues to drive a surprisingly strong economy. As long as a strong labor market supports household demand, there is a risk that inflation will become entrenched.
“To avoid the S&P 500's first three-week decline since September of last year, investors should not delay rate cuts due to weak inflation,” said Chris Larkin of Morgan Stanley's E-Trade. We need to overcome concerns that this is the case.” “In the short term, the first full week of earnings season could set the tone, but geopolitical tensions in the Middle East remain a wild card.”
In commodities, West Texas Intermediate rose in Asia after recovering the $85 level on Monday. Israeli military officials reiterated that Israel had no choice but to respond to the weekend's attack on Iran. Gold was solid in early trading.
This week's main events:
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China retail sales, industrial production, GDP, Tuesday
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German ZEW survey forecast, Tuesday
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US housing starts, industrial production, Tuesday
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Tuesday's results for Morgan Stanley and Bank of America.
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Fed Vice Chairman Philip Jefferson speaks on Tuesday
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BOE Governor Andrew Bailey speaks on Tuesday
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IMF releases latest global economic outlook on Tuesday
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Eurozone CPI, Wednesday
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Fed issues beige book on Wednesday
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Cleveland Fed President Loretta Mester speaks Wednesday
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Federal Reserve President Michelle Bowman speaks on Wednesday
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BOE Governor Andrew Bailey speaks on Wednesday
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Taiwan Semiconductor's financial results, Thursday
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US conference board leading index, number of existing homes sold, number of new unemployment insurance claims, Thursday
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Fed Director Michelle Bowman speaks Thursday
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New York Fed President John Williams speaks Thursday
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Atlanta Fed President Rafael Bostic speaks Thursday
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BOE Deputy Governor Dave Lumsden and ECB Board Member Joachim Nagel speak on Friday
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Chicago Fed President Austan Goolsby speaks on Friday
The main movements in the market are:
stock
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S&P 500 futures were little changed as of 11:13 a.m. Tokyo time.
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Nikkei 225 futures (OSE) fell 1.8%
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Japan's TOPIX fell 1.5%
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Australia's S&P/ASX 200 falls 1.8%
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Hong Kong's Hang Seng fell 1.3%.
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The Shanghai Composite fell 0.9%.
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Euro Stoxx50 futures fall 1%
currency
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Bloomberg Dollar Spot Index rose 0.2%
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The euro fell 0.1% to $1.0613.
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The Japanese yen remained almost unchanged at 154.38 yen to the dollar.
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The offshore yuan fell 0.2% to 7.2728 yuan to the dollar.
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The Australian dollar fell 0.4% to $0.6414.
cryptocurrency
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Bitcoin fell 0.1% to $63,061.01.
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Ether fell 0.2% to $3,078.1.
bond
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The 10-year government bond yield was almost unchanged at 4.61%.
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Japan's 10-year bond yield rose 1 basis point to 0.865%.
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The Australian 10-year bond yield rose 4 basis points to 4.31%.
merchandise
This article was produced in partnership with Bloomberg Automation.
–With assistance from Zhu Lin.
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