(Bloomberg) — Stocks and currencies whipsawed on Tuesday as investors gauged the health of the Chinese economy and reassessed a nascent upswing in shares.
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US equity futures fluctuated and European contracts fell after the region-wide Euro Stoxx 50 benchmark jumped 1.7% on Monday. Share markets across Asia seesawed in mixed trade that saw Hong Kong and mainland China stocks edge higher after early losses and Australian and South Korean markets fall.
The pressure facing stocks followed the sharp swings last year that saw 20% in value wiped from global equities, the worst run since the financial crisis. Bonds lost 16% of value, the biggest decline since at least 1990 for one leading measure, as central banks hiked interest rates to slow inflation.
“We’re starting the year with tight financial conditions, a potential inflation pulse coming out of China and by extension that means we’ll probably have to go into the start of this calendar year relatively cautious across the whole portfolio,” Marc Franklin, senior portfolio manager for Manulife Investment Management, said in an interview with Bloomberg Television.
The yen strengthened as much as 0.8% against the greenback to pierce 130 per dollar — the highest level since June. It gained against all its Group-of-10 peers, in particular the commodity currencies of Australia, New Zealand and Canada. The advance follows sustained efforts by the Bank of Japan to depress yields on government debt, with the stronger yen indicating that traders believe the central bank will be forced to reduce its easy policy settings.
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The dollar traded flat and there was no cash Treasuries trading in Asia given Japanese markets are shut Tuesday. Gold surged around 1% to above $1,840 per ounce for the first time since June.
Elsewhere in markets, oil declined while the price of US natural gas fell as warmer weather was expected to reduce demand for heating. A private China purchasing managers index contracted for the fifth consecutive month. Other data on the docket for Tuesday includes German unemployment claims.
Read more: Treasury Strategists Expect Lower Yields, Steeper Curve in 2023
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Some of the main moves in markets:
Stocks
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S&P 500 futures were little changed as of 12:22 p.m. Tokyo time
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Australia’s S&P/ASX 200 fell 1.5%
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Hong Kong’s Hang Seng rose 1.1%
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The Shanghai Composite rose 0.3%
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Euro Stoxx 50 futures fell 0.6%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0673
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The Japanese yen rose 0.7% to 129.82 per dollar
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The offshore yuan rose 0.6% to 6.8877 per dollar
Cryptocurrencies
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Bitcoin fell 0.4% to $16,676.87
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Ether fell 0.4% to $1,214.13
Bonds
Commodities
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West Texas Intermediate crude fell 0.2% to $80.09 a barrel
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Spot gold rose 1% to $1,842.02 an ounce
This story was produced with the assistance of Bloomberg Automation.
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