US Session (01/05/2022)

US markets fell further as the Federal Reserve's minutes indicated the possibility of earlier and faster interest rate hikes.

The S&P 500 lost 1.9%, led by real estate losses, while the Nasdaq 100 fell 3.1% as traders strengthened their belief that the US Federal Reserve will raise interest rates at least three times this year.

The 10-year Treasury yield rose to 1.71%, its highest level since April. The value of the dollar has hardly altered.

Technology companies fell for the second day in a row as rising treasury yields exacerbated growth fears. Earlier in the afternoon, the tech crisis moved to Asia, with a measure of Chinese names listed in Hong Kong falling to a six-year low. Europe, on the other hand, was generally spared, with the Stoxx Europe 600 setting a new high.

Markets have mostly focused on tighter monetary policy; but, fears about the omicron variant's threat to global growth remain. Hong Kong has reinstated social controls and suspended flights from eight nations. Meanwhile, school closures in the United States are increasing as the number of cases increases.

Markets and economy brace as the Fed's first hike could come in two months

Asia Session (01/05/2022)

Asia's stocks fell on Thursday after a selloff in U.S. technology stocks and treasuries accelerated after Federal Reserve minutes indicated that interest-rate hikes may be more aggressive than many had anticipated.

An MSCI index of regional equities fell for the third day in a row, though declines were less severe than in New York. Futures in the US fluctuated after the Nasdaq100 fell the most since March as rising treasury yields exacerbated concerns about growth and profitability. The S&P500 fell as traders increased their bets that US interest rates will rise at least three times this year.

The yield on the 10-year US Treasury note has reduced some of its gains. It had risen to 1.71%, the highest level since April.

Overnight swap markets moved to price in an 80% chance of a 25 basis-point hike at the Fed's March meeting. The dollar remains steady.

In Hong Kong, a selloff in Chinese technology companies has subsided. Chinese companies listed in the US fell further after Tencent Holdings Ltd. cut its stake in an online gaming company, raising fears of similar action at other companies in the face of Beijing's regulatory crackdown on the sector.


Europe Session (01/05/2022)

Trading of US index futures fell slightly, with the selling primarily in Nasdaq 100 contracts, hinting a retreat in technology stocks stay a while. Treasuries were varied as traders considered the Federal Reserve’s tightening plan versus the spread of Covid. The dollar weakened.

Nasdaq 100 futures were 0.4% lower, likely due to caution surrounding the impact of higher yields on equity valuations. S&P 500 index futures stayed mostly level, while Europe's Stoxx 600 gauge traded close to a record high. Markets received another reminder of the ongoing threat to global growth from the pandemic, as Hong Kong reinstated social measures and banned flights from eight countries.

A selloff in technology stocks reached Asia, throwing a gauge of Chinese names listed in Hong Kong toward a six-year low. Investors are now dealing with the predicament of deepening fears on global growth combined with a faster tightening by the federal reserve.

ECB's Kazaks: The ECB is prepared to hike rates and reduce stimulus if necessary.

The UK sees April as the deadline for finding a solution to increasing energy prices.

The BoJ is set to slightly raise its inflation prediction for the coming fiscal year - Sources

For 2 weeks, Hong Kong will stop flights from 8 countries, including the United Kingdom and the United States.

Okinawa in Japan is seeking stricter COVID measures - Kyodo.


Thursday FX Option Expiries

EUR/USD: 1.1300 (EU1.43B), 1.1275 (EU1.31B), 1.1225 (EU1.03B)
USD/JPY: 113.45 ($1.37B), 115.50 ($1.01B), 115.00 ($925M)
AUD/USD: 0.7025 (AUD589.3M), 0.7220 (AUD339.3M), 0.7050 (AUD306M)
USD/CNY: 6.4000 ($651M), 6.7500 ($500M), 6.3630 ($480M)
USD/CAD: 1.2750 ($472M), 1.2785 ($436M), 1.2550 ($310M)
GBP/USD: 1.3505 (GBP373.2M), 1.3600 (GBP345.6M)
NZD/USD: 0.6200 (NZD700M), 0.8200 (NZD609.8M), 0.9200 (NZD543.5M)
USD/MXN: 22.00 ($480M), 23.09 ($400M), 18.40 ($400M)
USD/BRL: 5.3850 ($390M), 5.5300 ($360M)
USD/KRW: 1085.00 ($400M)