Asian stocks opened lower on Monday, following a tech-led decline on Wall Street last week, as investors awaited the Federal Reserve and Bank of Japan policy meetings. The dollar and Treasury yields edged higher.
Tech Giants Drag Down US Indices
The S&P 500 erased its weekly gain, while the Nasdaq 100 slid 1.8% on Friday, as a massive options event amplified volatility and traders weighed the impacts of a strike that hit Detroit automakers. Big tech losses were led by Nvidia Corp. and Meta Platforms Inc., which both fell more than 3.5%. A gauge of chipmakers sank on a news report that Taiwan Semiconductor Manufacturing Co. has asked major suppliers to delay shipment of high-end equipment.
Piles of derivatives contracts tied to stocks, index options and futures expired Friday, compelling traders to roll over their existing positions or to start new ones. This time, it coincided with the rebalancing of benchmark indexes including the S&P 500, another catalyst for more share transactions.
Fed and BOJ Meetings in Focus
The Fed’s policy decision is scheduled for Wednesday, with investors looking for clues on the timing and pace of tapering its bond purchases amid inflation pressures and signs of slowing growth. The central bank is also expected to update its economic projections and interest rate outlook.
The Bank of Japan will hold its monetary policy meeting on Friday, after a national holiday on Monday. The BOJ is likely to maintain its ultra-easy stance and extend its pandemic-relief program, while facing questions about its role in the government’s new stimulus package.
US Inflation Expectations Fall
US inflation expectations fell to the lowest in more than two years as consumers grew more optimistic about the economic outlook, data showed Friday. A measure of New York state factory activity unexpectedly expanded amid new orders.
A resilient US economy will prompt the Fed to pencil in one more interest-rate hike this year and stay at the peak level next year for longer than previously expected, according to economists surveyed by Bloomberg News.
Asian Markets Open Lower
Asian equities look set to open lower following tech-led declines on Wall Street Friday. Futures contracts for Australia and Hong Kong both traded down, while Japanese markets are shut Monday for a national holiday.
In early currency trading Monday, the dollar weakened against most of its G-10 peers after a gauge for the greenback ended last week down 0.4%, snapping an eight-week winning streak. The Australian dollar and yen traded within narrow ranges.
Treasury yields rose Friday, with the rate-sensitive two-year rate closing above 5%.
In Asia, distressed Chinese developer Country Garden Holdings Co. faces more tests Monday including a vote on stretching payment of a local bond by three years. Meanwhile, union workers at Chevron Corp.’s liquefied natural gas facilities in Western Australia continued rolling 24-hour stoppages for a second day, prolonging uncertainty over global supply of the fuel.