Asian stocks dropped in the wake of another plunge on Wall Street as the prospect of higher interest rates and turmoil in Europe stoked fears of global recession.
An index of the region’s equities headed for its seventh straight weekly loss, the longest losing streak since 2015. US futures fluctuated after the S&P 500 slid more than 2% to the lowest in almost two years.
The dollar swung between gains and losses versus major currencies including the pound as investors weighed risks emanating from the debt crisis gripping the UK. Treasury yields were little changed after days of being whipsawed.
The Cboe Volatility Index has been well over 30 for almost all of this week, reflecting heightened worry among equity investors. Another group of Federal Reserve officials struck a hawkish tone, German inflation topped 10% and the UK government’s tax plan continued to weigh on market sentiment.
The Bank of Japan boosted its planned bond purchases at a regular operation on Friday as it sought to cap upward pressure on yields, while Prime Minister Fumio Kishida instructed his government to come up with an economic stimulus package by the end of October.
The offshore yuan weakened and was at risk of further depreciation next week, when China goes on a one-week holiday, leaving Beijing unable to guide investor expectations with its daily reference rate.
“Our assumption is that the Chinese government will continue to fight this administratively as long as they can before they have to step in with direct intervention and have to start selling down US reserves,” Charlene Chu, senior analyst for Autonomous Research, said on Bloomberg Television.
Amid the economic pressure, China’s central government shifted to allow some cities to lower their mortgage rates for first home purchases in its latest bid to help the country’s struggling housing market.
The tech-heavy Nasdaq 100 dropped almost 4% during the session after St. Louis Fed President James Bullard said investors have now understood that they can’t escape additional rate hikes in coming months. The index was dragged down by Apple Inc., which fell after a rare analyst downgrade from Bank of America warning of weaker consumer demand for its popular devices.
Key events this week:
- Euro zone CPI, unemployment, Friday
- US consumer income , University of Michigan consumer sentiment, Friday
- Fed’s Lael Brainard and John Williams speak, Friday
Some of the main moves in markets:
- S&P 500 futures decreased 0.1% as of 1:53 p.m. Tokyo time. The S&P 500 fell 2.1%
- Nasdaq 100 futures lost 0.1%. The Nasdaq 100 fell 2.9%
- Japan’s Topix index fell 1.9%
- South Korea’s Kospi index slipped 0.3%
- Hong Kong’s Hang Seng Index was down 0.1%
- China’s Shanghai Composite Index fell 0.2%
- Australia’s S&P/ASX 200 Index dropped 1.2%
- Euro Stoxx 50 futures shed 0.1%
- The Bloomberg Dollar Spot Index fluctuated
- The euro was down 0.1% to $0.9805
- The Japanese yen decreased 0.1% to 144.65 per dollar
- The offshore yuan fell 0.2% to 7.1115 per dollar
- Bitcoin fell 0.4% to $19,428
- Ether dropped 0.7% to $1,328
- The yield on 10-year Treasuries was little changed at 3.79%
- Australia’s 10-year bond yield rose almost two basis points to 3.95%
- West Texas Intermediate crude decreased 0.4% to $80.89 a barrel
- Spot gold climbed 0.1% to $1 662.57 an ounce
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