By Adam Haigh, Bloomberg News–
Stocks dropped in Asia after Wednesday’s U.S. sell-off, though losses weren’t as severe, after the inversion of part of the Treasury yield curve raised recession fears. The yield on 30-year Treasuries dropped below 2% for the first time.
Shares in Australia bore the brunt of losses, with stocks also lower in Japan. Hong Kong equities pared their retreat and S&P 500 Index futures climbed along with the yuan as China’s central bank added liquidity to the financial system. Still, caution remained as Treasuries extended gains after the 10-year yield slid below the two-year for the first time since 2007. Bonds also climbed in Australia and New Zealand, while crude oil extended losses and gold edged higher.
Warnings flashing in bond markets are spooking investors who are already seeking shelter from the fraught geopolitical climate and the impact of the global trade war. While curve inversions normally precede economic downturns, they do not necessarily signal an imminent collapse in growth.
“You no longer have anything anchoring markets, you no longer have the Fed’s ability to repress financial volatility,” Mohamed El-Erian, Allianz Chief Economic Advisor & Bloomberg Opinion columnist, told Bloomberg TV. “The answer is more pro-growth policies to lift structural impediments and unfortunately that’s unlikely to materialize.”
Meantime, the Australian dollar jumped and bond yields pared some of their declines after a stronger-than-expected jobs report prompted traders to trim bets of another impending interest-rate cut.
Here are the main moves in markets:
Japan’s Topix index fell 1.4% as of 1:43 p.m. in Tokyo.Australia’s S&P/ASX 200 Index lost 2.7%.Hang Seng Index slid 0.2%.Shanghai Composite Index fell 0.6%.Futures on the S&P 500 Index added 0.2%. The underlying gauge fell 2.9% Wednesday.Euro Stoxx 50 futures rose 0.1%.
The yen was at 105.89 per dollar.The offshore yuan was up 0.2% to 7.0411 per dollar.The Bloomberg Dollar Spot Index dipped 0.1%.The euro bought $1.1147, little changed.
The yield on 10-year Treasuries slipped three basis points to 1.55%. The 30 year yield was at 1.97%.Australia’s 10-year yield slid five basis points to 0.89%.
Gold rose 0.3% to $1,521.02 an ounce.West Texas Intermediate crude decreased 0.6% to $54.91 a barrel.
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