European and U.S. equity futures faced a slight downturn as investors prepared for a slew of economic data and comments from Federal Reserve speakers. This comes as Japan’s two-year bond yields reached the highest point in over a decade.
Futures contracts hinted at potential equity declines following the S&P 500’s slip, marking the first decrease in four days on Monday. Market participants await key data, including the Fed’s favored inflation gauge scheduled for Thursday. Asian shares displayed mixed performance, with Chinese shares, particularly in the tech sector, showing strength.
Japan’s two-year bond yield surged to levels unseen since 2011 after inflation data exceeded expectations, fueling speculation that the central bank might abandon its negative-interest-rate policy in the coming months. Traders increased the likelihood of the Bank of Japan exiting the policy by April to around 82%, up from 78% on Monday.
Kazuya Fujiwara, a fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo, noted that the inflation report adds to speculation about the BOJ ending the negative-rate policy soon, acting as a selling catalyst for bonds. This data underscores ongoing inflationary pressures.
The Asian equity benchmark is poised for a monthly gain, primarily driven by the rally in Japanese and Chinese markets. Despite this, uncertainty lingers in the markets regarding potential Fed rate cuts, China’s support measures, and the attractiveness of share valuations for sustaining further gains.
Chinese state-backed funds injected over 410 billion yuan ($57 billion) into onshore shares this year to support the market, according to UBS Group AG estimates. The calculations are based on “excess” transactions of 54 Chinese exchange-traded funds.
Fast-fashion company Shein is contemplating shifting its initial public offering from New York to London due to listing challenges in the U.S. Shein, initially founded in China and now headquartered in Singapore, is exploring alternatives for its IPO.
Treasuries experienced modest gains in Asia after a decline on Monday amid substantial corporate issuance and two note auctions. Wall Street closely monitors how the bond market will handle the absorption of heavy Treasury and corporate sales amid month-end positioning.
Bitcoin briefly surpassed the $57,000 level, marking its first ascent to this level since late 2021. This was supported by investor demand through exchange-traded funds and additional purchases by MicroStrategy Inc.
In commodities, global benchmark Brent traded above $82 a barrel, following a rise on Monday. Gold steadied near a two-week high as the market awaits more clues about when the Fed might begin cutting interest rates.
