Kospi drops 3.3 per cent and Brent tops 107 dollars as a week of rate decisions opens
Asian shares fell on Monday morning: Japan's Nikkei lost 1.7 per cent, South Korea's Kospi 3.3 per cent and MSCI's Asia-Pacific index outside Japan 0.8 per cent, while Brent rose 2.6 per cent to 107.36 dollars after strikes on Saudi Arabia and Gulf shipping. Nasdaq 100 futures had fallen 1.2 per cent on Sunday night after Sam Altman called an OpenAI listing this year ill-advised. Markets price an 86 per cent chance of a Federal Reserve rate increase this week.
Economics & Markets··Morning
Tokyo and Seoul open lower while crude climbs above 107 dollars
Asian shares slid on Monday morning. Japan's benchmark Nikkei fell 1.7 per cent, South Korea's benchmark Kospi 3.3 per cent and MSCI's index of Asia-Pacific shares outside Japan 0.8 per cent, while S&P 500 futures lost 0.5 per cent. Brent crude rose 2.6 per cent to 107.36 dollars a barrel and US crude 2.4 per cent to 102.48 dollars after new strikes on Saudi Arabia and on ships in the Gulf. The dollar held at 153.49 yen, and gold slipped 0.3 per cent to 4,336 dollars an ounce.[1]
Sunday-night futures fell after Altman ruled out an OpenAI listing this year
The Asian session followed a weak Sunday night in New York. Dow futures fell 0.4 per cent, S&P 500 futures 0.6 per cent and Nasdaq 100 futures 1.2 per cent after Sam Altman, OpenAI's chief executive, called a listing of the company this year ill-advised in an interview published on Saturday, and after Dario Amodei, Anthropic's chief executive, urged a slower pace for frontier models, the most capable class of AI systems. Altman's interview came a month after OpenAI finance chief Sarah Friar said the company would list by 2027 at the latest. Oil also rose more than 2 per cent on Sunday after Saudi Arabia shut the pipeline that bypasses the Strait of Hormuz. The futures move added to last week's losses: the Dow lost 1.6 per cent, its largest weekly decline since March, while the S&P 500 shed 0.8 per cent and the Nasdaq 0.7 per cent.[2]
Three central banks decide this week
The selling comes before a week full of central-bank decisions. Fed funds futures price a roughly 86 per cent chance that the Federal Reserve, the US central bank, raises its rate at this week's meeting, according to the FedWatch tool of the exchange operator CME. Markets imply about a 76 per cent chance that the Bank of Japan lifts its rate to 1.25 per cent on Friday, and the Bank of England is expected to hold at 3.75 per cent on Thursday. Bond yields had already risen: last week 2-year US Treasury yields rose 26 basis points and 10-year yields 19 basis points, taking the 10-year to 4.967 per cent. Goldman Sachs strategist Ben Snider said the S&P 500 has averaged a 3-month return of minus 2 per cent at the start of seven hiking cycles in recent decades and an average return of plus 9 per cent in the 12 months after the first increase.[1], [2]
