Asia Stocks Set to Decline, Dollar Extends Rally: Markets Wrap

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(Bloomberg) -- Asian stocks look set to follow Wall Street lower as investors contemplate a protracted period of higher interest rates. The dollar enters a sixth day of gains. Most Read from BloombergDimon Warns 7% Fed Rate Still Possible, Times of India SaysRepublican Moderates Turn to Rare Maneuver to Avoid Lengthy Government ShutdownIndians Have Five Days to Deposit $3 Billion in Soon-to-Be-Withdrawn BanknotesStocks Sink as Bears Take Charge, Dollar Rallies: Markets WrapTrump Found Liable for

Stock futures in Japan, Australia and Hong Kong all declined. The S&P 500 and Nasdaq 100 indexes both slumped 1.5% as Wall Street’s fear gauge — the Cboe Volatility Index or VIX — hit the highest since late May after US consumer confidence fell to a four-month low. The MSCI All Country World Index, one of the broadest measures of global equities, fell for an eighth day Tuesday, matching its longest losing streak in the past decade.

With the bond market guiding the direction for stocks and currencies, investors are pondering whether 10-year Treasury yields will extend gains, said Tony Sycamore, an analyst at IG in Sydney. If current levels break, “then there is little in the way of upside resistance until the 4.90%/5.00% region, which would likely unleash a violent response in equity markets.”

Investors “seem to favor the cut-run manoeuvre this week,” said Stephen Innes, managing partner at SPI Asset Management. “Heightened investor anxiety due to the looming possibility of a partial US government shutdown is not helping matters.”

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