(Bloomberg) -- Stocks declined in Asia on Tuesday and sovereign bonds were in demand, a pattern reflecting concerns about the outlook for economic growth as central banks hike interest rates to curb runaway inflation.
MSCI Inc.’s Asia-Pacific equity index shed about 0.5% amid losses in Japan, China and Hong Kong. US futures wavered and European contracts were in the red after a blow to sentiment from poor earnings at chipmaker Nvidia Corp.
Australian debt pushed higher and Treasuries held an advance. An inversion in the US yield curve highlights expectations that further aggressive Federal Reserve interest-rate hikes could spark a recession.
The dollar was steady, oil dropped toward $90 a barrel, gold slipped and Bitcoin fell from $24,000.
A near-10% rebound in global stocks from bear-market lows appears to have paused as investors await US inflation data due Wednesday. The figures will shape views on how aggressively the Fed will have to raise borrowing costs and whether a shift to rate cuts later next year is a realistic possibility.
The day of reckoning for the equity bounce may well come when the market realizes “the Fed is not going to pivot on interest-rate hikes in early 2023, inflation should remain pretty persistent and rate hikes should continue,” Saira Malik, chief investment officer at Nuveen, said on Bloomberg Television.
Consumer expectations for US inflation over the coming years declined sharply in the latest survey by the Fed Bank of New York. But almost all inflation measures continue to run well above the Fed’s 2% target.
Much “economic softness may still be a head of us,” Mona Mahajan, senior investment strategist at Edward Jones & Co., said on Bloomberg Television, adding “we don’t think there is scope for really a sustained rally until the inflation story comes into check.”
What to watch this week:
- US CPI data, Wednesday
- Chicago Fed President Charles Evans and his Minneapolis counterpart Neel Kashkari due to speak, Wednesday
- US PPI, initial jobless claims, Thursday
- San Francisco Fed President Mary Daly is interviewed on Bloomberg Television, Thursday
- Euro-area industrial production, Friday
- US University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 10:59 a.m. in Tokyo. The S&P 500 fell 0.1%
- Nasdaq 100 futures lost 0.1%. The Nasdaq 100 fell 0.4%
- Japan’s Topix index fell 0.7%
- Australia’s S&P/ASX 200 index was flat
- South Korea’s Kospi index shed 0.4%
- Hong Kong’s Hang Seng index fell 0.8%
- China’s Shanghai Composite Index dropped 0.1%
- Euro Stoxx 50 futures were down 0.4%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was at $1.0192, down 0.1%
- The Japanese yen was at 134.75 per dollar, up 0.2%
- The offshore yuan was at 6.7644 per dollar
Bonds
- The yield on 10-year Treasuries declined one basis point to 2.75%
- Australia’s 10-year yield shed five basis points to reach 3.16%
Commodities
- West Texas Intermediate crude fell 0.6% to $90.23 a barrel
- Gold was at $1,783.97 an ounce, down 0.3%