Asia stocks mixed, US futures fall amid crosswinds: markets wrap

Stocks in Asia were mixed Thursday as investors weighed signs of gradual improvement in China’s economy amid ongoing concerns about a US recession from monetary tightening. Asian currencies rebounded with the release of Chinese data.

Stocks rose in China where data showed a strong pickup in services spending as Covid outbreaks and restrictions were gradually eased. They fell in Japan, while tech-heavy indexes in Taiwan and South Korea were sold again. The dollar dropped.

US futures declined after the S&P 500 and the Nasdaq 100 ended little changed on Wednesday in choppy trading amid end-of-quarter portfolio rebalancing. European futures were lower.

Benchmark 10-year Treasury yields edged higher, paring the eight basis point decline yesterday when traders upped their bets on a recession halting the Federal Reserve’s aggressive tightening campaign. Oil bounced around $110 a barrel as demand worries persisted.

Fed Chair Jerome Powell and his counterparts in Europe and the UK warned inflation is going to be longer lasting as they gathered at the European Central Bank’s annual forum in Portugal. A view that central banks need to act aggressively on rates because they misjudged inflation has roiled markets this year, with global stocks about to close out their worst quarter since the three months ended March 2020.

“I wouldn’t rush in to buy anything blindly right now; I still think we are going to have some pains over the next couple of weeks and months as inflation starts to stabilize,” Erin Browne, multi-asset strategies portfolio manager at Pacific Investment Management Co., said on the “Bloomberg Surveillance” show.

Fed Bank of Cleveland President Loretta Mester said officials must not be complacent about increases in long-term inflation expectations and should act forcefully to curb price pressures. Mester later told CNBC that the Fed is “just at the beginning” of raising rates and she wants to see the benchmark lending rate reach 3% to 3.5% this year and “a little bit above 4% next year” even if that tips the economy into a recession.

The People’s Bank of China reiterated a pledge to provide stronger monetary policy support for the economy, emphasizing goals to stabilize jobs and inflation. Chinese tourism-related stocks rallied as the government eased some domestic travel rules.

What to watch this week:

• US personal income, PCE deflator, initial jobless claims, Thursday
• Eurozone CPI, Friday
• US construction spending, ISM Manufacturing, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.3% as of 6 a.m. in London. The S&P 500 was little changed
• Nasdaq 100 futures fell 0.4%. The Nasdaq 100 rose 0.2%
• Topix index fell 1.1%
• Australia’s S&P/ASX 200 Index lost 0.8%
• Kospi index fell 1.3%
• Hang Seng Index was steady
• Shanghai Composite Index rose 1.3%
• Euro Stoxx 50 futures fell 0.5%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%
• The euro was at $1.0453
• The Japanese yen was at 136.52 per dollar
• The offshore yuan was at 6.67003 per dollar

Bonds

• The yield on 10-year Treasuries was at 3.10%, up one basis point
• Australia’s 10-year bond yield was at 3.69%

Commodities

• West Texas Intermediate crude was at $109.70 a barrel
• Gold was at $1 816