Stocks fall as bond traders turn to jobs data

A passerby wearing a face mask walks past an electronic board displaying the world stock index in Tokyo
FILE PHOTO: Passers-by wearing face masks walk past an electronic board showing world stock indexes, amid the coronavirus disease (COVID-19) pandemic, in Tokyo, Japan November 1 2021. REUTERS / Issei Kato

December 3, 2021

By Tom Westbrook

SYDNEY (Reuters) – Asian stocks wobbled and risk-sensitive currencies in the region sagged on Friday as investors bet inflation would drive U.S. rates higher next year, even when the new coronavirus variant Omicron casts a cloud of prospects.

S&P 500 futures contracts traded below flat afternoon levels in Hong Kong, recovering from earlier losses as news that Chinese ride-hailing giant Didi would delist its New York listing broke. raised concerns about geopolitical regulation and technology.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.4%. Japan’s Nikkei index hits two-month low and is expected to drop 3% weekly. [.T]

The risk-sensitive Australian dollar edged past one- and two-year Treasury yields, tracking US short-term interest rate expectations, which look set to record levels The biggest one-week gain in more than two years. [US/]

“Right now everyone at the Fed is saying that rate cuts need to be accelerated and rate hikes are coming much sooner than we thought,” said Michael Every, global strategist at Rabobank.

“The flattening of the curve we see says a lot about that.”

Federal Reserve Chairman Jerome Powell kicked off the shift this week by saying the bank would discuss a faster decline at this month’s meeting, prompting them to bet that rallies in time will eventually curb growth, inflation and, ultimately, interest rates in the future.

The gap between 2-year and 10-year Treasury yields has tightened by more than 16.6 basis points this week, the sharpest curve since June 2020. 10-year yields hold at 1.4410% on Friday, down 4.4 bps this week.

US labor data, due at 1330 GMT and expected to show 550,000 jobs created last month, is the next focus for bond traders.

“A printout of 550,000 jobs would show faster Fed-taper trade reasserting itself,” said Jeffrey Halley at brokerage OANDA.

European stock futures and FTSE futures were up about 0.4%.


Oil, another growth agent, was also beaten this week and although it was flat on Friday, with Brent crude futures at $70.89 a barrel. It is trending down 2.5% weekly and 18% below its three-year high in October. [O/R]

OPEC and its allies on Thursday agreed to proceed with the planned production increase.

While Didi’s plan to move its listing to Hong Kong wasn’t entirely a surprise, news of Didi’s US delisting still made the fragile mood worse.

It also capped a bleak few hours for investors in the sector, after Southeast Asian ride-hailing giant Grab dropped 20% on its Nasdaq debut.

Shares of Japan’s SoftBank, which is related to both stocks, fell 3% to a 14-month low – adding to disappointment from the US regulatory challenge over Nvidia’s takeover of the manufacturer. Arm by Nvidia chip maker owned by SoftBank.

Technology shares in Hong Kong fell to a two-month low. [.HK]

“The delays that have started to happen have some people worried about the uncertainty as to how this will affect the US picture,” said Central Bank of Singapore analyst Moh Siong Sim. Greater China”.

In the United States, the Dow Jones Industrial Average’s 1.8 percent gain on Thursday was its biggest one-day gain since March, but it is still tracking a fourth consecutive weekly decline. [.N]

The CBOE Volatility Index, sometimes referred to as Wall Street’s “fear gauge,” is heading for a one-week jump from February 2020. Indicators of implied volatility in money markets The currency is also on the rise, even as Friday’s trading was calm.

The euro was steady at $1.1299 and the yen held at 113.23 each, while the Australian and New Zealand dollars slipped – with the Aussie quickly hitting a one-year low of just under 71 coins. [FRX/]

Traders will need to wait at least another week or so for early information on Omicron virulence or vaccine resistance.

(Reporting by Tom Westbrook; Editing by Sam Holmes) Stocks fall as bond traders turn to jobs data

Bobby Allyn

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