Equities Rally Pauses as Japan Leads Asia Lower: Markets Wrap

The rally in global shares paused Tuesday amid lackluster trading as US futures inched lower and Japanese equities weighed down a gauge of Asia stocks.

(Bloomberg) — The rally in global shares paused Tuesday amid lackluster trading as US futures inched lower and Japanese equities weighed down a gauge of Asia stocks.

Japan’s Topix fell, as did South Korea’s benchmark, while Hong Kong’s Hang Seng Index rose and shares in Shanghai fluctuated. Australian equities were little changed ahead of an interest-rate decision.

This follows an advance of just 0.1% for the S&P 500 in a shortened session Monday that ended at lunchtime. The Nasdaq 100 added 0.2% on a day that brought data showing a slowdown in manufacturing. 

Major currencies were mostly steady. Treasuries weren’t trading Tuesday due to the Independence Day holiday in the US.

The offshore yuan strengthened slightly before returning to being little changed after the People’s Bank of China extended again its efforts to prop up the currency through its daily reference rate. 

Economists and traders are divided on likelihood of a rate hike or pause by the Reserve Bank of Australia Tuesday. The Aussie fluctuated in a narrow range after modest increases over the past three days. Yields on the nation’s policy-sensitive three-year government bonds rose seven basis points to above 4%.

“Trying to call time on the rate-hike cycles is still a little bit fraught with danger,” Laura Fitzsimmons, executive director of macro rates and FX sales at JPMorgan Chase & Co. in Sydney, said on Bloomberg Television. “Rates are not going to be cut anytime soon.”

Shares of Chinese non-ferrous metals firms climbed after the government imposed restrictions on exports of gallium and germanium, which are crucial for for semiconductor, telecommunications and electric vehicles. The ban is seen China’s escalation of the tit-for-tat technology trade conflict with the US and its allies.

The new restrictions are a second, and much bigger, countermeasure to the tech war after China’s similar move on Micron Technology Inc., according to Jefferies analysts, including Edison Lee. “If this doesn’t change the US-China dynamics, more rare earth export controls should be expected,” they wrote in a note.

Meanwhile, a key part of the US Treasury yield curve approached its most inverted level in decades on Monday as traders priced in further hikes from the Federal Reserve. Two-year yields exceeded the 10-year by around 111 basis points.

Cooling signals in the world’s biggest economy — which are set to influence the trajectory of the Fed’s monetary-tightening cycle — mean investors are tempering expectations for stocks for the remainder of the year, especially as central banks worldwide have maintained their hawkish rhetoric.

The manufacturing sector painted a grim picture as US factory activity fell to its weakest level in more than three years. Production and new orders data also suggested a pullback.

Elsewhere, oil rose modestly as traders assessed the latest salvo from OPEC+ kingpins Saudi Arabia and Russia to prop up prices by curbing supply. Gold was little changed.

Key events this week:

  • Australia interest rate decision, Tuesday
  • US Independence Day national holiday. Financial markets closed, Tuesday
  • China Caixin services and composite PMI, Wednesday
  • Eurozone S&P Global Eurozone services PMI, PPI, Wednesday
  • OPEC International Seminar, speakers including OPEC+ oil ministers, kicks off in Vienna, Wednesday
  • FOMC issues minutes on June policy meeting, Wednesday
  • New York Fed President John Williams in “fireside chat” at meeting of the Central Bank Research Association at the New York Fed, Wednesday
  • US initial jobless claims, trade, ISM services, job openings, Thursday
  • Dallas Fed President Lorie Logan speaks on a panel about the policy challenges for central banks at CEBRA meeting, Thursday
  • US unemployment rate, nonfarm payrolls, Friday
  • ECB’s Christine Lagarde addresses an event in France, Friday

Some of the main moves in markets today:


  • S&P 500 futures were little changed as of 12:07 p.m. Tokyo time. The S&P 500 rose 0.1%
  • Nasdaq 100 futures fell 0.1%. The Nasdaq 100 rose 0.2%
  • Japan’s Topix fell 0.6%
  • Australia’s S&P/ASX 200 was little changed
  • Hong Kong’s Hang Seng rose 0.4%
  • The Shanghai Composite was little changed
  • Euro Stoxx 50 futures were little changed


  • The Bloomberg Dollar Spot Index was little changed
  • The euro was little changed at $1.0905
  • The Japanese yen was little changed at 144.60 per dollar
  • The offshore yuan was little changed at 7.2477 per dollar
  • The Australian dollar was little changed at $0.6674


  • Bitcoin rose 0.3% to $31,223.74
  • Ether fell 0.2% to $1,955.1


  • Japan’s 10-year yield was unchanged at 0.400%
  • Australia’s 10-year yield advanced five basis points to 4.02%


  • West Texas Intermediate crude rose 0.7% to $70.28 a barrel
  • Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Jason Scott and April Ma.

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