On Tuesday, after a global bounce from a bear market in the U.S. has stalled amid a rising crude oil prices and Treasury yields, investors in Asia are poised for a soft start.
The futures fell for Japan and Hong Kong while Australia's were flat. The US contracts fluctuated after the S&P 500 and tech-heavy Nasdaq 100 posted small losses. Trading flows are impacted by periodic institutional portfolio rebalancing.
China's bourse has become a bright spot in an otherwise dour backdrop. The CSI 300 is up more than 5% this quarter, compared to a 14% drop in global shares. The central bank governor Yi Gang vowed to maintain supportive monetary policy to boost the economy's recovery from Covid and other stresses.
The treasuries fell after weak demand at auctions. The yield fell to around 3.2% over the course of the 10 year period. The dollar was little changed. Crude rose toward $110 a barrel Libya and Ecuador flagged potential output cuts on political unrest.
The rise in borrowing costs to fight inflation slows economic activity in a slew of nations has made risk assets fleeting. Analysts say that still-bullish earnings estimates are next in line with a reality check.
Chris Iggo, chief investment officer at AXA Investment Managers, wrote in a note that this is the risk in full play and that we are living through a downside adjustment. There is a chance that the earnings cycle is about to turn down, as higher bond yields are pressuring equity valuations boosted by excess liquidity. Russia s war in Ukraine and limiting its profits due to rising energy prices have been the main topics of discussion at the Group of Seven summit in the Bavarian Alps.
G-7 leaders are going to instruct ministers on the topic of implementing a price cap on Russian gas. The leaders are expected to mention a mechanism to cap Russian oil prices in the final communique.
Some of the biggest moves in markets are:
None of the Japanese yen traded at 135.40 per dollar.
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