(Bloomberg) — Shares in Asia fell Thursday after a global stock market rally stalled, even as the bond market edged higher on forecasts of lower interest rates.
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Equities in Australia, Japan and South Korea declined and futures for Hong Kong benchmarks also showed losses, echoing selling pressure in New York that dragged the S&P 500 index 1.5% lower. The tech-heavy Nasdaq 100 fell by the same margin, erasing gains earlier in the session that initially pushed the gauge to an intra-day record. US futures were moderately higher in early Asian trading.
Traders pointed to relative strength readings for US stocks that had reached levels typically seen before a decline. Wall Street’s fear gauge — the VIX — had also traded near multi-year lows before snapping higher on Wednesday. A large zero-day options trade on the S&P 500 may have amplified the selling.
The declines produced the first drop in ten sessions for the MSCI All Country World Index of global equities after a streak that was fueled by Federal Reserve indications it will cut rates next year.
“It certainly looks like it has become very one-sided, and it is a scary world when everybody gets on one side of the boat,” Cameron Dawson, chief investment officer of Newedge Wealth, told Bloomberg Television. “The market is very extended, we do see it being very overbought. But we’re in this melt-up period and so oftentimes things can get even sillier before they really do have a pullback.”
Treasuries, meanwhile, powered ahead Wednesday after British 10-year notes led a global bond rally following data showing a slowdown in UK inflation. Australia and New Zealand notes tracked the moves in early trading, while Treasuries traded little changed Thursday at the Asian open.
Wednesday data showed US consumer confidence in December rose by the most since early 2021. Existing home sales edged higher in November, bouncing off of a 13-year low, while separate data showed mortgage rates fell to their lowest since June.
Toyota Slumps
Shares of Toyota Motor Corp shares slumped the most in more than 18 months Thursday as subsidiary Daihatsu Motor Co.’s offices were raided over a safety scandal and the automaker recalled 1 million cars in the US. The raid came after revelations that the carmaker and supplier manipulated the results of collision safety tests dating as far back as 1989, forcing it to halt all shipments.
In the US, Citigroup Inc. decided to exit the distressed-debt trading business, according to people briefed on the matter. Morgan Stanley, meanwhile, considered allocating a portion of its balance sheet to a new private credit fund, according to people with knowledge of the plans. FedEx Corp., a bellwether for the US economy, reported diminished profits, heightening concerns about a slump. The delivery company’s shares dropped 12% on Wednesday.
In commodities, oil fell almost 1% in early Asian trading to below $74 per barrel, erasing a small gain from the prior session. Gold steadied after falling Wednesday to trade close to $2,030 per ounce.
Meanwhile, Bitcoin is trading at the highest price in more than a week with the Securities and Exchange Commission facing a Jan. 10 deadline to reject or approve ETFs. The token rose as much as 4.2% to $44,294 on Wednesday and last traded at $45,000 in April 2021.
Investors will also be bracing for US gross domestic product data due later Thursday, and a busy Friday of releases that includes UK GDP, US consumer sentiment and so-called core personal-consumption expenditures price index — the Fed’s preferred inflation gauge.
Key events this week:
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Bank Indonesia rate decision, Thursday
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US GDP, initial jobless claims, Conf. Board leading index, Thursday
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Nike earnings, Thursday
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Japan inflation, Friday
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UK GDP, Friday
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US personal income and spending, new home sales, durable goods, University of Michigan consumer sentiment index, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures rose 0.2% as of 9:47 a.m. Tokyo time. The S&P 500 fell 1.5%
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Nasdaq 100 futures rose 0.2%. The Nasdaq 100 fell 1.5%
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Hang Seng futures fell 0.8%
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Japan’s Topix fell 1.1%
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Australia’s S&P/ASX 200 fell 0.3%
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Euro Stoxx 50 futures fell 0.7%
Currencies
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The Bloomberg Dollar Spot Index fell 0.1%
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The euro was little changed at $1.0949
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The Japanese yen was little changed at 143.44 per dollar
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The offshore yuan was little changed at 7.1479 per dollar
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The Australian dollar rose 0.2% to $0.6745
Cryptocurrencies
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Bitcoin rose 0.4% to $43,608.35
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Ether rose 0.7% to $2,194.96
Bonds
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The yield on 10-year Treasuries advanced one basis point to 3.86%
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Japan’s 10-year yield advanced two basis points to 0.575%
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Australia’s 10-year yield declined four basis points to 4.01%
Commodities
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West Texas Intermediate crude fell 0.8% to $73.63 a barrel
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Spot gold rose 0.1% to $2,033.56 an ounce
This story was produced with the assistance of Bloomberg Automation.
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