Asia Stocks to Follow US Slump With Focus on BOJ: Markets Wrap

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(Bloomberg) -- Equity markets in Asia are poised to gap lower after US stocks suffered the biggest drop in six months.Most Read from BloombergEx-Goldman Bankers Make a Fortune With Controversial Bet on CoalIndia Suspends Visas, Canada Pulls Diplomats Amid Tensions‘Dead Space’ Co-Creator Departs Startup After Newest Game FlopsWall Street Trading Roiled by ‘Post-Fed Hangover’: Markets WrapCisco to Buy Splunk for $28 Billion in Giant AI-Powered Data BetFutures for indexes in Japan, Hong Kong and Au

Futures for indexes in Japan, Hong Kong and Australia all pointed to declines, extending weekly losses. The S&P 500 fell 1.6% on Thursday, the most since March, and all major US equity benchmarks broke below their key 100-day moving averages. Treasury 10-year yields rose and the dollar strengthened as the latest reading on the labor market reinforced the case for the Federal Reserve’s higher-for-longer stance.

“On net, it was a solid read from one of the closest to ‘real time’ employment data investors are afforded,” said Ian Lyngen at BMO Capital Markets. “It also marginally increases the chances the Fed hikes in November and certainly reinforces the Fed’s messaging regarding avoiding cuts as long as possible in 2024.”

Bond traders are bracing for Treasury yields to keep pushing higher after the Fed signaled it’s likely to hold interest rates at lofty levels well into next year. Yields on Australian and New Zealand government debt rose early Friday. Bond investors’ pain isn’t over yet, even though the Fed is done raising interest rates, said Bill Gross, the former chief investment officer of Pacific Investment Management Co.In an investment outlook, Gross said bond markets are headed for an unprecedented third year of losses, because of sticky inflation and widening deficits, a result of government fiscal spending he equates with throwing “money out of a helicopter.

 

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