GLOBAL MARKETS DJIA 33947.10 -482.78 -1.40% Nasdaq 11239.94 -221.56 -1.93% S&P 500 3998.84 -72.86 -1.79% FTSE 100 7567.54 11.31 0.15% Nikkei Stock 27827.50 7.10 0.03% Hang Seng 19487.73 -30.56 -0.16% Kospi 2405.76 -13.56 -0.56% SGX Nifty* 18742.00 -68.0 -0.36% *Dec contract USD/JPY 136.99-7.00 +0.14% Range 137.17 136.30 EUR/USD 1.0499-502 +0.08% Range 1.0520 1.0488 CBOT Wheat Dec $7.154 per bushel Spot Gold $1,770.18/oz 0.1% Nymex Crude (NY) $77.33 -$2.65 US STOCKS
U.S. stocks ended lower on strong economic data, a sign of the intense market fixation with the risk that the Federal Reserve will continue to raise interest rates throughout the next year.
The S&P 500 dropped 1.8%, pulling back after a November rally that was driven by hopes that the Fed would slow down its pace of rate increases. The Dow Jones Industrial Average declined 1.4% and the Nasdaq Composite Index lost 1.9%.
Monday's readings on service-sector activity and factory output suggested the economy remains resilient despite the Fed's bid to slow growth. The November rally, during which both stocks and bond prices rose, in itself was enough to make a giveback kind of day like today inevitable, said David Kelly, chief global strategist at JPMorgan Funds. "We were due for some sort of relapse," he said.
ASIAN STOCKS
The Nikkei Stock Average was down 0.1% at 27790.23, as falls in tech and electronics stocks helped offset gains in auto and financial stocks. Bank and insurance stocks were higher, following sharp gains in the U.S. Treasury yields overnight. Investors were focusing on the yen and crude-oil prices. The broader market index Topix was flat at 1948.22.
South Korea's benchmark Kospi fell 0.6% to 2404.49 in early trade, tracking Wall Street's decline overnight. Electronics, internet and chemicals stocks retreated. Foreign investors were net sellers as strong U.S. economic data highlighted again the risk that the Federal Reserve may continue to raise interest rates next year. USD/KRW was 0.9% higher at 1,304.20 on renewed risk-off sentiment.
Hong Kong's Hang Seng Index fell 0.6% to 19405.15 in early trade, weakening from strong gains in the previous session and tracking declines on Wall Street overnight. Investors continued to gauge the pace of Fed's rate increases amid strong U.S. economic data, while also keeping an eye on any further signs of looser Covid restrictions in China. Property, tech and financials were among top laggards.
Chinese shares opened lower, reversing Monday's gains, as investors awaited further signals from the country's top leaders on the next steps of reopening. Telecoms and auto makers were the biggest losers. The transportation and catering sectors remained robust, following Monday's gains amid hope for further reopening. The Shanghai Composite Index and Shenzhen Composite Index were each down 0.4%, while the ChiNext Price Index was 0.5% lower.
FOREX
Fed Chairman Powell's message last week was ultimately dovish, signaling "that a slower pace is on the way," Goldman Sachs analysts said in a note. They said a slower pace means easier financial conditions, which should support risky assets in part by dictating a greater response to downside surprises. "This was apparent on Friday when wage growth jumped and payrolls beat at +263k, but our (financial conditions index) was essentially unchanged on the day." This makes it hard for the U.S. dollar to regain lost ground in the near term, but they maintain their view that the dollar should get a second wind and it's too early for a sustained turn. The dollar strengthened 0.3% against the euro and 1.6% against the yen, and the WSJ Dollar Index gained 0.7%.
METALS
Gold was slightly higher in early Asian trade. It should be a quiet week for the metal until the release of producer price index data and University of Michigan inflation expectations, said Oanda market analyst Edward Moya in a note. "Gold looks like it will consolidate below the $1,800 level but a sustained move lower could require a fresh inflationary catalyst," he added. Spot gold was up 0.1% at $1,770.18/oz.
OIL SUMMARY
Crude oil prices rose in Asian trade. The recent gains for crude oil likely reflect optimism that China may further ease Covid-19 restrictions, ANZ analysts said in a note. ANZ points to news reports saying Beijing may announce new easing measures as soon as Wednesday. Signs that Russian oil supplies are tapering off are also are keeping prices supported, the analysts said. The front-month WTI futures contract was up 1.0% at $77.68/bbl, while the front-month Brent crude contract rose 0.8% to $83.32/bbl.
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(END) Dow Jones Newswires
12-05-22 2215ET
