(Bloomberg) – Asian stocks opened lower on Wednesday in muted trade after a holiday for U.S. markets. Treasury yields fell and major currencies were little changed.
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Stocks fell in Japan, South Korea and Australia, as did futures for the S&P 500 and Nasdaq 100. Contracts for Hong Kong’s Hang Seng index also fell.
Global stock trading was light on Tuesday given the celebration of Independence Day in the United States. The European Stoxx 600 rose slightly on trading volume that was a third below the 30-day average.
The two-year Treasury yield fell about three basis points to 4.9% when trading resumed on Wednesday. The 10-year yield hovered around 3.84%. On Monday, the two-year yield had surpassed the 10-year rate by the largest amount since March, when the key 2s10 segment of the yield curve became the most inverted since the 1980s.
Investors in Asia will look to the Caixin China Purchasing Managers’ Index for further clues about the health of the world’s second-largest economy. The country’s stock market has underperformed global and regional benchmarks this year and the currency has come under downward pressure.
Longer term, Friday’s US nonfarm payrolls report will be a key event for markets that offers some guidance on the path of monetary policy.
The offshore yuan was little changed in early trading on Wednesday. It will be in focus later in the morning when the Chinese central bank announces its daily correction for the currency.
“China’s economy is on a totally different path right now and that’s also reflected in its currency,” Charu Chanana, strategist at Saxo Capital Markets, told Bloomberg Television. She added that the authorities seem to tolerate the depreciation of the yuan as long as the pace is stable.
The yen was slightly stronger than the 145 level against the dollar, but still in a zone that is creating unease among policymakers in Tokyo. The Australian dollar stabilized after seesaw movements on Tuesday when the central bank kept interest rates unchanged while warning that there could be increases ahead.
After US equities rallied strongly in the first half of the year, investors are now worried that higher rates and a deteriorating economic backdrop will limit gains going forward.
Citigroup Inc.’s Chris Montagu said the positioning seemed “very wide-ranging” and cited data showing investors piled into bullish bets on US stock futures towards the end of June.
Among other notes of caution, strategists at Goldman Sachs Group Inc. wrote that it’s too early to rule out the risk of rising interest rates hanging over stocks.
Elsewhere in the markets, oil remained higher after major OPEC+ producers Saudi Arabia and Russia announced production cuts to stem a fall in prices. West Texas Intermediate rose above $71 a barrel.
Key events this week:
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Chinese Caixin Services and Composite PMI, Wednesday
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Eurozone S&P Eurozone Global Services PMI, PPI, Wednesday
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OPEC’s international seminar, with speakers including OPEC+ oil ministers, kicks off in Vienna on Wednesday
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FOMC releases minutes of June policy meeting on Wednesday
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New York Fed Chairman John Williams in a “fireside chat” at a meeting of the Central Bank Research Association at the New York Fed on Wednesday
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U.S. initial jobless claims, trade, ISM services, job openings, Thursday
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Dallas Fed Chair Lorie Logan speaks during a panel on central bank policy challenges at the CEBRA meeting on Thursday
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U.S. unemployment rate, nonfarm payrolls, Friday
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The ECB’s Christine Lagarde addresses an event in France on Friday
Some of the major moves in the markets today:
Shares
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S&P 500 futures fell 0.1% at 9:18 a.m. Tokyo time
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Nasdaq 100 futures fell 0.2%
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Japan’s Topix index fell 0.6%
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Australia’s S&P/ASX 200 index fell 0.2%
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Hong Kong Hang Seng futures fell 0.4%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0884
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The Japanese yen was little changed at 144.49 per dollar
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The offshore yuan was little changed at 7.2321 to the dollar
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The Aussie dollar was little changed at $0.6693
Cryptocurrencies
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Bitcoin was little changed at $30,820.52
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Ether fell 0.1% to $1,939.46
Obligations
Goods
This story was produced with assistance from Bloomberg Automation.
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