(Bloomberg) -- Shares declined in Asia following a fourth straight drop in US equities amid persistent concern that rising interest rates and geopolitical threats will crimp global growth.
Stocks slumped in Japan and South Korea as trading resumed after holidays. Contracts for the S&P 500 and Nasdaq 100 fluctuated while Australian equities edged higher. The shares of Taiwan Semiconductor Manufacturing Co. plunged more than 7% as the selloff in semiconductor stocks continued.
A measure of dollar strength held near the highest this month and the yen traded within sight of the original level that spurred Japanese authorities to defend the currency in September.
Yield on the 30-year Treasury rose to 3.93%, the highest since 2014, as trading in US government bonds resumed following Monday’s holiday. The 10-year yield climbed to 3.95%, while the two-year was little changed.
Investors parsed comments from Federal Reserve officials for any signs of a let up in the central bank’s hawkish stance. Vice Chair Lael Brainard laid out a case for caution, noting that previous rate increases were still working through the economy. Chicago Fed President Charles Evans said he wants to quickly get to a point where policy makers can feel comfortable pausing in order to reduce the risk of overshooting.
The mood remains fragile ahead of Thursday’s US inflation data, with the case for another 75 basis-point rate hike likely to be strong if the data comes in hotter-than-expected.
The heads of the International Monetary Fund and World Bank warned of a rising risk of a global recession as advanced economies slow and faster inflation forces the Fed to keep raising interest rates, adding to the debt pressures on developing nations.
“A recession is very possible — our subjective probability over the next year is 35% — but we think it would require additional shocks,” Goldman Sachs Group Inc. chief economist Jan Hatzius wrote in a note. Renewed upward pressure on fuel prices is an area to watch and Goldman also sees “a small but growing risk of an unnecessary monetary policy overshoot if Fed officials focus too much on lagging inflation indicators.”
Meanwhile, Russian President Vladimir Putin threatened further missile attacks on Ukraine after hitting Kyiv and other cities in the most intense barrage of strikes since the first days of its invasion, marking a dangerous new escalation in the war.
“It’s little wonder investors enter the week in a dreary mood, especially with headlines from Ukraine signaling a further escalation in geopolitical tensions,” Christopher Smart, chief global strategist at Barings, said in a note. “Of course, markets are meant to look ahead, but it’s hard not to see the next few quarters bringing more of the same.”
Key events this week:
- Earnings this week include: JPMorgan Chase & Co., Citigroup Inc., Morgan Stanley, BlackRock Inc., Delta Air Lines Inc., UnitedHealth Group Inc., U.S. Bancorp, Wells Fargo & Co.
- IMF’s World Economic Outlook and Global Financial Stability Report, Tuesday
- Fed’s Loretta Mester speaks, Tuesday
- BOE’s Andrew Bailey speaks, Tuesday
- FOMC minutes for September meeting, Wednesday
- US PPI, mortgage applications, Wednesday
- OPEC Monthly Oil Market Report, Wednesday
- Fed’s Michelle Bowman and Neel Kashkari speak
- ECB’s Christine Lagarde speaks
- US CPI, initial jobless claims, Thursday
- G-20 finance ministers and central bankers meet, Thursday
- China CPI, PPI, trade, Friday
- US retail sales, business inventories, University of Michigan consumer sentiment, Friday
- BOE emergency bond buying is set to end, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.2% as of 10:07 a.m. Tokyo time. The S&P 500 fell 0.7% on Monday
- Nasdaq 100 futures were up 0.3%. The Nasdaq 100 fell 1%
- Japan’s Topix index dropped 1%
- South Korea’s Kospi index declined 2.4%
- The S&P/ASX 200 Index rose 0.5%
- Hong Kong’s Hang Seng futures slipped 0.6%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.2% to 0.9719 per dollar
- The British pound rose 0.3% to 1.1090 per dollar
- The Japanese yen was little changed at 145.71 per dollar
- The offshore yuan was little changed at 7.1494 per dollar
Cryptocurrencies
- Bitcoin fell 1.1% to $19,056
- Ether fell 2.1% to $1,279
Bonds
- The yield on 10-year Treasury climbed nearly seven basis points to 3.95%
- Australia’s 10-year yield advanced 10 basis points to 3.96%
Commodities
- West Texas Intermediate crude was little changed at $91.12 a barrel
- Gold rose 0.2% to $1,672.55 an ounce