(March 25): Stocks in Asia tracked heavy losses in U.S. equities as bond yields continued to march lower amid concerns that momentum is slowing in the global economy.
The risk-off tone that built on Friday extended into Asia early Monday, as indexes of shares in South Korea, Japan and Australian fell more than 1 percent. Australiaâ€™s 10-year bond yield hit an all-time low after the yield on Germanyâ€™s 10-year bonds tumbled below zero and a closely watched gauge of Treasuries inverted for the first time since 2007, underscoring the return to globally low long-term rates. The dollar edged higher.
Global equities are showing signs of cracking, after rising to a five-month high, amid a slew of weakening economic data and commentary on the slowing world expansion from the Federal Reserve and others thatâ€™s helped embolden a rally in sovereign bonds. Gains in stocks left the S&P 500 Index and MSCI World Index trading near the levels they were at during the height of last yearâ€™s market rally.
â€œIâ€™m starting to worry that the U.S. could be facing a more severe downturn next year,â€ said Erik Nielsen, chief economist at UniCredit Bank AG in London. â€œMarkets will be volatile most of this year, along a risk-off path. Iâ€™ll sell on strengths, and I donâ€™t buy much on weakness.â€
Investors also digested news that Special Counsel Robert Mueller found no evidence anyone close to President Donald Trump colluded with Russia in the 2016 presidential campaign. While Mueller failed to exonerate Trump on obstruction of justice, Attorney General William Barr said he did not find enough evidence to pursue that charge.
In the U.K., sterling steadied at the start of a week that could bring the risk of yet another vote on U.K. Prime Minister Theresa Mayâ€™s Brexit plan. Chancellor of the Exchequer Philip Hammond and other cabinet colleagues publicly backed May on Sunday as several British newspapers said she is under increasing pressure to stand down over her handling of Britainâ€™s exit from the European Union.
The Turkish lira edged lower after Turkeyâ€™s banking regulator started investigation into JPMorgan Chase & Co. and another probe of unspecified banks for stoking the currencyâ€™s plunge.
Here are some key events coming up:
Apple Inc. unveils new products including video and magazine subscriptions on Monday. U.K. Parliament to vote Tuesday on Prime Minister Theresa Mayâ€™s deal to leave the European Union, which lost by wide margins on Jan. 15 and March 12. Chinaâ€™s Boao Forum for Asia holds its annual conference this week. A top Chinese government leader will deliver a keynote speech, and officials including Central Bank Governor Yi Gang and Finance Minister Liu Kun are scheduled to speak. Fed Governor Randal Quarles will speak Friday to the Shadow Open Market Committee on â€œStrategic Approaches to the Fedâ€™s Balance Sheet and Communications.â€
These are the main moves in markets:
Japanâ€™s Topix index declined 2.3 percent as of 9:11 a.m. in Tokyo. South Koreaâ€™s Kospi index dropped 1.4 percent. Australiaâ€™s S&P/ASX 200 Index fell 1.1 percent. The S&P 500 Index decreased 1.9 percent Friday. Futures slipped 0.2 percent.
The yen fell 0.1 percent to 110.07 per dollar. The offshore yuan held at 6.7278 per dollar. The Bloomberg Dollar Spot Index rose 0.1 percent early Monday, a third day of gains. The euro decreased 0.1 percent to $1.1293. The British pound held at $1.3198, down 0.1 percent.
The yield on 10-yearÂ Treasuries remained at 2.44 percent after sinking 10 basis points Friday. Australiaâ€™s 10-year yield fell five basis points to 1.78 percent.
West Texas Intermediate crude slipped 0.6 percent to $58.71 a barrel. Gold slid 0.2 percent to $1,311.30 an ounce. – Bloomberg