Asian stocks on Friday recovered some of the losses sparked by the Federal Reserve’s pivot to tighter monetary policy, while US equity futures climbed after strong Apple Inc. earnings bolstered sentiment.
Japan helped an Asia-Pacific share gauge to rise for the first session in six. China fluctuated as state-run media tried to talk up equities, arguing they offer long-term potential following a slump. But Chinese real-estate developers sank on fresh concerns about the ailing property sector.
Contracts on the tech-heavy Nasdaq 100 outperformed after Apple Inc. rallied in extended trading on record sales. European futures wavered. US shares Thursday ended lower in a volatile session, again failing to hold intraday rallies. The Russell 2000 small-cap index slumped into a bear market.
A dollar gauge was on course for a weekly jump of about 1.5%, putting it in sight of the strongest level since 2020. Bets on a faster pace of Fed hikes to fight inflation have boosted the currency.
Treasuries slipped and the yield curve remained flatter. The latter is a possible sign of worries over the US economic outlook as the Fed dials back support.
Money markets are now pricing in nearly five Fed hikes this year following Chair Jerome Powell’s hawkish tone Wednesday. That’s up from three expected as recently as December. The prospect of receding Fed stimulus is whipsawing markets: global stocks, for instance, have lost over $7 trillion this month.
“Really what we are seeing is historic intraday volatility,” Chris Murphy, co-head of derivatives strategy at Susquehanna International Group, said on Bloomberg Television. “It’s been a pretty amazing ride so far this year.”
Powell telegraphed a March liftoff and one question is whether the Fed will deliver the first half-point hike in more than two decades. Investors could question the market outlook anew if expectations for such a move grow.
The US stock market is priced “quite aggressively” versus other developed nations as well as emerging markets, and valuations in the latter can be a tailwind rather than a headwind as in the US, Feifei Li, partner and CIO of equity strategies at Research Affiliates, said on Bloomberg Television.
Elsewhere, oil headed for a sixth weekly advance and gold nursed losses.
What to watch this week:
- Euro zone economic confidence, consumer confidence Friday.
- US consumer income, University of Michigan consumer sentiment Friday.
Some of the main moves in markets:
- S&P 500 futures rose 0.4% as of 2:07 p.m. in Tokyo. The S&P 500 fell 0.5%
- Nasdaq 100 futures rose 0.8%. The Nasdaq 100 fell 1.2%
- Japan’s Topix index added 1.9%
- South Korea’s Kospi index rose 1.5%
- Australia’s S&P/ASX 200 index rose 2.1%
- China’s Shanghai Composite index was steady
- Hong Kong’s Hang Seng index shed 1%
- Euro Stoxx 50 futures fell 0.2%
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro was at $1.1151
- The Japanese yen was at 115.42 per dollar
- The offshore yuan was at 6.3628 per dollar
- The yield on 10-year Treasuries rose two basis points to 1.82%
- The yield on Australia’s 10-year bond fell seven basis points to 1.95%
- West Texas Intermediate crude climbed 0.5% to $87.03 a barrel
- Gold was at $1 797.67 an ounce