This content was published on August 28, 2022 – 23:01
(Bloomberg) — US equity futures slid Monday and stocks in Asia looked set for a weak open after hawkish rhetoric from Federal Reserve Chair Jerome Powell sparked sharp drops on Wall Street and pushed up the dollar.
Contracts for the tech-heavy Nasdaq 100 fell about 1% after the gauge shed more than 4% Friday. Declines in S&P 500 futures came close to that level too. Bourses in Japan and Australia seemed to be on course to lose more than 1%.
The greenback continued to be firm in the Asian morning with commodity-linked currencies like Australia’s among the weaker performers. Crude oil, gold and Bitcoin were all on the back foot.
Powell in his address last week at the Fed’s Jackson Hole symposium flagged the likely need for restrictive monetary policy for some time to curb high inflation and cautioned against loosening monetary conditions prematurely. He also warned of the potential for economic pain for households and businesses.
Those comments contrast with market bets for reductions in borrowing costs next year as growth slows. Equities are the locus of the fallout. Moves were more muted in Treasuries — shorter-maturity yields rose Friday, deepening a yield curve inversion that for some points to expectations of a recession.
Powell signaled “once they get to whatever the final hike is, they’re going to stay there for a while,” Charles Schwab & Co. Chief Investment Strategist Liz Ann Sonders said on Bloomberg Television. “The market had trouble digesting that.”
Futures for Hong Kong’s bourse edged up earlier after a gauge of US-listed Chinese shares weathered much of Friday’s equity market rout.
That may reflect optimism about a preliminary deal between Beijing and Washington to ease a dispute over reviewing audits of Chinese firms. An agreement is needed to avert the delisting of about 200 Chinese companies from US exchanges.
Some of the main moves in markets:
- S&P 500 futures fell 0.8% as of 7:52 a.m. in Tokyo. The S&P 500 fell 3.4%
- Nasdaq 100 futures dropped 1%. The Nasdaq 100 shed 4.1%
- Nikkei 225 futures fell 1.9%
- Australia’s S&P/ASX 200 futures lost 1.5%
- Hang Seng futures rose 0.2%
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro was at $0.9951, down 0.2%
- The Japanese yen was at 137.84 per dollar, down 0.2%
- The offshore yuan was at 6.8919 per dollar
- The yield on 10-year Treasuries rose about two basis …….