China, Hong Kong Stocks Sag After U.S. Sell-Off: Markets Wrap

A pedestrian walks past an electronic stock board outside a securities firm in Tokyo. Photo: Bloomberg

(Bloomberg) — U.S. stock futures retraced a slice of Tuesday’s sharp decline, the yen dipped and Chinese and Hong Kong markets declined as investors took in early Super Tuesday election results alongside the Federal Reserve’s emergency interest-rate cut. Treasuries advanced.

Early wins by Joe Biden lessened the chance of the Bernie Sanders nomination that had unsettled some investors. Futures on the S&P 500 approached 1% after the index tumbled almost 3% in wake of an emergency 50 basis-point Fed move that failed to ease concerns about an economic downturn. Asian stocks were volatile as declines in Hong Kong, China and Australia offset gains in South Korea, while Japanese shares swung on heavy volume. Ten-year Treasury yields stayed below 1% after falling below that level for the first time Tuesday.

Biden, positioned as a moderate against a more progressive Sanders, nabbed early wins in Virginia, North Carolina, Tennessee, and Alabama as the Super Tuesday results rolled in. But states with polls closing later, such as Texas and California, could still aid Sanders.

“Biden would be a less severe change for markets that already have enough to worry about, with all these external shocks,” said Jerry Braakman, chief investment officer of First American Trust, in Santa Ana, California. “Sanders would bring a lot changes that markets wouldn’t necessarily like.”

Equities earlier had tumbled after Fed Chairman Jerome Powell warned that the virus outbreak will weigh on activity “for some time.” Expectations the Fed may act again as soon as this month show markets remain extremely cautious about the economy’s prospects to weather the hit.

Elsewhere, oil remained well bid after an OPEC+ committee recommendation for a larger supply cut to offset lost demand from the spread of the virus.

These are the main moves in markets:

Stocks

-- Futures on the S&P 500 Index rose 0.6% as of 11:15 a.m. in Tokyo. The underlying gauge dropped 2.8% on Tuesday.

-- Japan’s Topix index was little changed.

-- Hong Kong’s Hang Seng fell 0.9%.

-- The Shanghai Composite slid 0.2%.

-- South Korea’s Kospi index rose 1.8%.

-- Australia’s S&P/ASX 200 Index fell 1.5%.

Bonds

-- The yield on 10-year Treasuries slid about four basis points to 0.96%.

-- Australia’s 10-year yield dropped about eight basis points to 0.71%.