Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

Morning Bid: Investors hunker down as perfect storm breaks

Published 03/04/2024, 08:47 am
Updated 03/04/2024, 09:51 am
© Reuters. FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., February 6, 2024.  REUTERS/Brendan McDermid/File Photo

By Jamie McGeever

(Reuters) - A look at the day ahead in Asian markets.

The perfect storm of higher bond yields, corporate jitters and rising price pressures that hit Wall Street on Tuesday looks set to darken the Asian market landscape on Wednesday, as investors wonder whether this might be the start of a deeper correction.

Asia's economic calendar has some top-tier releases in the shape of Chinese and Japanese service sector purchasing managers index data, but the market tone on Wednesday will probably be set by the latest tightening of global financial conditions. 

The 10-year U.S. Treasury yield hit 4.40% and Brent crude touched $89 a barrel on Tuesday - both the highest levels this year - and Tesla (NASDAQ:TSLA) shares slumped 5% after the company announced the first fall in quarterly deliveries for nearly four years. 

The three main U.S. indexes shed 0.7% to 1.0%, and the S&P 500 clocked its biggest fall in a month. This doesn't bode well for Asia on Wednesday, but there is a 'glass half full' argument to be made.

In some ways, Wall Street held up pretty well in light of the break out in yields, back up in implied rates and renewed talk of 'bond vigilantes' coming back to stalk the bond market. A decline of 1% or less, on the heels of a relentless rally culminating in last week's record highs, is small beer.

Still, there are plenty reasons to be cautious.

The threat of currency market intervention from Japanese authorities to support the beleaguered yen refuses to lift, as the yen continues to hover close to the 152.00 per dollar level.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Recent moves in China's currency are also worth noting. The offshore yuan is creeping above the upper limit of the 2% band around the central bank's daily fixing rate. This comes ahead of U.S. Treasury Secretary Janet Yellen's return to China later this week for renewed dialogue with top officials in Beijing.

China's 'unofficial' Caixin services PMI data on Wednesday rounds off a surprisingly strong set of PMI reports that has fueled hopes that the world's second largest economy is finally picking up momentum. 

Ironically, however, this renewed optimism, together with punchy U.S. manufacturing PMIs, has helped put upward pressure on global bond yields, which in turn has put downward pressure on stocks. 

World markets may be back in a 'good news is bad news' mindset.

Alibaba (NYSE:BABA) shareholders may be asking themselves a similar question after the Chinese e-commerce giant said on Tuesday it conducted a $4.8 billion share buyback in the three months to March, its second biggest quarterly buyback ever.

Hong Kong-listed shares rose 1%, but U.S.-listed shares fell 0.7%.

Here are key developments that could provide more direction to markets on Wednesday:

- China Caixin services PMI (March)

- Japan services PMI (March)

- Hong Kong retail sales (February)

(By Jamie McGeever; Editing by Josie Kao)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.