(Bloomberg) -- Stocks fell in Asia on Friday amid fears of an economic downturn as monetary policy tightens to fight high inflation.
Japanese shares slid about 2%, but China and Hong Kong managed to buck the regional trend with a steady performance. US equity futures made modest gains after the S&P 500 closed at its lowest since December 2020.
Treasuries pared declines, taking the 10-year yield to about 3.22%. The dollar bounced from its worst two-day drop since 2020.
Markets are rounding off a week buffeted by interest-rate increases, including the Federal Reserve’s biggest move since 1994, a shock Swiss National Bank hike that energized the franc and the latest boost in UK borrowing costs.
Japan, in contrast, stuck with monetary easing Friday. But the Bank of Japan made a rare reference to the need to pay due attention to currencies. The yen -- the weakest performer in the Group of 10 basket this year -- sank about 1% against the dollar.
Doubts about the sustainability of the central bank’s stance had stirred speculation of a potential policy surprise. Japan’s 10-year bond yield hit 0.265% earlier Friday, the highest since 2016, challenging a curve control policy that seeks a cap of 0.25%.
Rate hikes are draining liquidity, sparking losses in a range of assets. Global stocks face one of their worst weeks since pandemic-induced turmoil of 2020.
Investors are back focused on “all of the half-empty things and how much narrower” the Fed’s path is “in trying to stick a soft landing,” Carol Schleif, deputy chief investment officer at BMO Family Office, said on Bloomberg TV.
Spreads on US junk-rated corporate bonds hit levels last seen in 2020, a sign than investors expect economic woes to sap company performance.
Bitcoin fell toward the $20,000 level. Oil wavered as traders weighed the prospect of slower economic growth against tight supplies. Gold pared a rally.
Key events this week:
- Bank of Japan policy decision, Friday.
- Eurozone CPI, Friday.
- US Conference Board leading index, industrial production, Friday
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Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.4% as of 11:57 a.m. in Tokyo. The S&P 500 fell 3.3%
- Nasdaq 100 futures increased 0.6%. The Nasdaq 100 fell 4%
- Japan’s Topix index fell 2%
- Australia’s S&P/ASX 200 index dropped 2.1%
- South Korea’s Kospi index retreated 1.4%
- Hong Kong’s Hang Seng index added 0.4%
- China’s Shanghai Composite index fell 0.5%
- Euro Stoxx 50 futures dipped 0.3%
Currencies
- The Bloomberg Dollar Spot Index rose 0.3%
- The euro was at $1.0539, down 0.1%
- The Japanese yen was at 133.27 per dollar, down 0.8%
- The offshore yuan was at 6.7055 per dollar, down 0.3%
Bonds
- The yield on 10-year Treasuries rose three basis points to 3.22%
- Australia’s 10-year bond yield rose 11 basis points to 4.1%
Commodities
- West Texas Intermediate crude was at $117 a barrel, down 0.5%
- Gold was at $1,844.91 an ounce, down 0.6%