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Sydney - Equities fell across Asia and US stock-index futures retreated as a selloff in government bonds deepened and investors took profits after one of the best starts to a year in recent history.
The dollar edged higher after Monday’s decline and oil dropped for a second session.
Stocks in Japan, Hong Kong and Australia fell after the S&P 500 Index declined from a record high. Treasuries extended a retreat that’s taken yields to the highest since 2014, as traders gear up for a hectic week of economic data and the last Federal Reserve policy decision with Janet Yellen at the helm. German bund yields were little changed in early trading.
Meanwhile, the yen climbed and sterling fell for a second day.
“An acceleration in the selloff of global bond markets appears to be starting to let some of the air out of the recent rally in global equity markets,” said Michael Hewson, chief market analyst at CMC Markets UK.
“US markets suffered their worst one day fall this year, though sharp falls in tech stocks also contributed.” Apple shares tumbled as much as 2.6% amid renewed concerns about falling demand for the iPhone X.
A wariness is creeping into equity markets as surging rates on government bonds tests valuations for stocks. Still, strength in corporate earnings, a pick-up in economic growth and optimism over US tax cuts has helped drive up prices in many markets across the world to the highest on record this month.
Goldman Sachs predicts a correction in global stocks is on the horizon, but says any such pullback would be a buying opportunity.
Elsewhere, metals pared Monday’s gains and Bitcoin fell below $11 000.
Here are some important things to watch out for this week:
• Fed policy makers gather for Chair Janet Yellen’s final meeting on interest rates on Wednesday before her term ends.
• President Trump delivers his first State of the Union address.
• Tech giants Microsoft, Facebook, SAP, Alibaba, Apple, Alphabet and Amazon.com will announce earnings.
• Large-caps McDonald’s, Exxon Mobil, Merck & Co. Roche, Daimler, Deutsche Bank and Boeing also report.
• US employers probably added more jobs in January than a month earlier, economists forecast before the Friday report.
• Bank of England Governor Mark Carney will speak before the UK Parliament’s Economic Affairs Committee in London on Tuesday.
• Gauges of Chinese manufacturing and services industries are due on Wednesday.
• On Tuesday, data may show the eurozone economy with a solid expansion at a 0.6% quarterly rate.
• On Wednesday, the core eurozone inflation report may show an uptick from a year ago to 1% this month.
These are the main moves in markets:
Stocks
• Euro Stoxx 50 futures fell 0.6% in early European trading.
• Futures on the S&P 500 Index dropped 0.5% after its 0.7% slide on Monday, when the VIX index soared 25%.
• Japan’s Topix index was down 1.2% at the close, while the Nikkei 225 Stock Average fell 1.4%.
• South Korea’s Kospi index fell 1.2% and Australia’s S&P/ASX 200 Index retreated 0.9%.
• Hong Kong’s Hang Seng Index dropped 1.2%.
• The Hang Seng China Enterprises Index of mainland shares traded in Hong Kong fell 2%.
• The gauge has rallied 15% this year.
• The MSCI All-Country World Index declined 0.2% after falling 0.6% on Monday, the most since August.
Currencies
• The Bloomberg Dollar Spot Index was up 0.2% after jumping 0.3% on Monday.
• The euro held onto Monday’s declines at $1.2355.
• The pound was at $1.4018.
• The yen traded at ¥108.72/$.
Bonds
• The yield on 10-year Treasuries was up two basis points at 2.71%, the highest since April 2014.
• German 10-year bund yields were little changed at 0.69%.
Commodities
• West Texas Intermediate crude fell 1% to $64.91 a barrel.
• Gold fell 0.3% to $1 335.95 an ounce.
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