Asian stocks looked set to post the biggest quarterly decline in a year, while oil’s rally faltered and Treasury yields fell.
An Asia equity gauge traded steady Friday, with shares opening higher in Australia, but falling in Japan. The regional index is poised to post a quarterly loss of around 4 percent — the deepest since September 2022 — on speculations that global interest rates will remain higher for longer.
Hong Kong’s stock futures advanced, while contracts for the S&P 500 and Nasdaq 100 edged lower after the U.S indexes gained on strong performances by tech behemoths including Nvidia Corp. and Meta Platforms Inc.
Markets in mainland China are closed as the country starts its Golden Week holiday, which may damp trading in the region through the first week of October.
September is also still shaping up to be the worst month in 2023 for US stock benchmarks and the weakest month for global bonds since February after the Federal Reserve left interest rates at the highest in 22 years at its last meeting.
The dollar was little changed. The yen edged marginally lower against the greenback after data earlier showed inflation in Tokyo slowed for a third straight month in September, in line with Bank of Japan’s view that prices are set to cool further, while Japan’s industrial output was muted.
Treasury yields steadied after slipping from 16-year highs on weak consumer spending data and dovish Fed comments.
Oil tempered this week’s rally as investors cashed out. The commodity has gained for a fourth month, and is set for its best quarter since March 2022, following production cuts by OPEC+ linchpins Saudi Arabia and Russia.
In the US, dovish-leaning comments from one policymaker and weak consumer spending data helped stoke hope for some easing of the Fed’s messaging. Even if the US enters a recession it should be able to skirt a more severe downturn, according to Richmond Fed President Tom Barkin. Chair Jerome Powell sidestepped investor concerns over the outlook for interest rates at an event.
It’s still too early to know if another rate increase will be needed, Barkin told Bloomberg Television. Earlier, the Chicago Fed’s Austan Goolsbee said policymakers were at risk of overshooting on interest rates by putting too much emphasis on the idea that steep job losses are needed to quell inflation.
Personal consumption, the main driver of the US economy, rose an annualized 0.8% in the April-to-June period, the weakest advance in over a year. Other data showed GDP rose at an unrevised 2.1% rate during the period while weekly jobless claims came in lighter than estimates. Traders will next be looking to Friday data on the Fed’s preferred measure of inflation — the personal consumption expenditures price index.