HONG KONG, Oct.29 (Reuters) – Asian stocks and US stock futures fell on Friday, as quarterly earnings from Amazon and Apple resisted a recent strong trend and fears of growth and inflation continued to weigh down.
Investors, especially in bond and currency markets, are also concerned about the varied reactions of central banks around the world to rising inflation.
The largest MSCI Asia-Pacific stock index outside of Japan (.MIAPJ0000PUS) was down 0.3% at the start of trading and on track for a weekly loss of 1.3%, recording three weeks of earnings. Japan’s Nikkei (.N225) reversed its initial losses to trade flat.
Asian stocks were affected by a drop in Nasdaq (.NQcv1) futures, which fell 0.73% as Apple Inc (AAPL.O) and Amazon Inc (AMZN.O) released results after the close who missed expectations. Read more
S&P 500 futures fell 0.4%.
âThe background noise has not changed over the past few weeks, people are still concerned about stagflation, slowing growth numbers and rising inflation, but the price is higher in the bond market than in the stock market right now, âsaid Kerry Craig, global manager. Market strategist at JPMorgan Asset Management.
A strong earnings outlook has kept equity markets afloat and inflation is more of a concern for bond investors than it is for equity investors, Craig said. “At the same time, you are not getting very clear messages from responses from central banks around the world.”
Chinese stocks fell less than most other markets, with local blue chips (.CSI300) trading flat, although the Hong Kong benchmark (.HSI) lost 0.83%, once further weighed down by mainland Chinese real estate stocks (.HSMPI).
However, shares of China Evergrande Group opened 1.2% after the news that the cash-strapped developer had made payments for an offshore bond coupon before a grace period expired on Friday, thus fulfilling his second dollar bond repayment requirement this month. Read more
Overnight, the S&P 500 (.SPX) and Nasdaq (.IXIC) finished at record closing levels, while the Dow Jones Industrial Average (.DJI) closed just before its highest close.
As inflation fears grow, central bank rate policies remain a priority.
Speculation is mounting that the Reserve Bank of Australia will not be able to meet its forecast that it will likely not increase its cash rate by 0.1% before 2024, after the Reserve Bank of Australia again refused Friday to buy bonds to defend its 0.1% 2024 bond yield target. Read more
This target is at the heart of the RBA’s case, and as uncertainty around its outlook grows, Australian bonds have sold sharply.
Yields on three-year bonds jumped 33 basis points this week to 1.08%, the biggest increase since 2009. A month ago, they were trading at 0.30%.
Eurozone bond yields surged on Thursday after European Central Bank President Christine Lagarde dashed investors’ hopes that she would allay their concerns about soaring inflation and rate hikes.
That pushed the euro higher, the gains it held Friday in Asian hours to $ 1.1676.
“The European Central Bank has finally shifted its official statement on inflation from the denial of the summer months to a much more balanced assessment,” ING analysts said.
Now all eyes are on the Federal Reserve, whose political committee is meeting next week.
The dollar was weaker, largely on losses against the euro, with the dollar index, which measures the US currency against other majors, at 93.381, just off its lowest level this month achieved overnight.
US 10-year benchmark yields remained stable at 1.5677% US10YT = RR
The spread between 5-year and 30-year yields was 79.2 basis points, narrowing to 73.4 basis points overnight, its narrowest level since March 2020, due to heightened expectations of a Federal Reserve rate hike next year.
Oil held steady with Brent crude stable at $ 82.72 per barrel, although on track for its first weekly decline in eight weeks
Spot gold was also flat at $ 1,797 an ounce.
Reporting by Alun John; Editing by William Mallard
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