Asia Stocks Set to Follow U.S. Selloff; Bonds Gain

(Bloomberg) -- Asian equities futures pointed toward losses after U.S. stocks fell the most since Donald Trump’s election as reflation trades that bolstered the dollar and Treasury yields faltered.

Futures on benchmark gauges in Japan, Australia and Hong Kong indicated declines of at least 0.8 percent when trading begins. The S&P 500 Index sank more than 1 percent for the first time since Oct. 11, with the selloff deepening in the final 30 minutes of trading after Reuters reported North Korea would pursue an acceleration in its nuclear program. Treasury yields tumbled and the dollar slumped for a fifth straight day. Oil retreated and gold held gains.

Financial shares sank and volatility soared amid the biggest drop for U.S. stocks since the November election as concern grew that pro-growth policies won’t sail through Congress. Trump met with House Republicans Tuesday morning to rally support for the repeal of Obamacare as investors look for signs that his plans to cut corporate taxes and boost spending will move forward. House Republicans warned failure to pass a health-care bill on Thursday could imperil tax and spending reforms.

North Korea will seek to accelerate its nuclear and missile programs, including developing "preemptive first-strike capability" and an ICBM, Reuters reported, citing the nation’s deputy ambassador to the UN. For its part, the U.S. is exploring a new range of diplomatic, economic and security measures, Trump’s spokesman Sean Spicer said.

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What’s coming up the rest of this week:

• There’s a steady lineup of U.S. Fed speakers this week, headlined by Janet Yellen on March 23, while central bank policy decisions are expected in New Zealand, the Philippines and Sri Lanka.
• Earnings are due in Asia Wednesday from companies including Tencent Holdings Ltd.
• The House of Representatives votes Thursday on the repeal of the Affordable Care Act.
• March PMI for France is due Friday, along with final fourth-quarter GDP figures.

Here are the main moves in markets:

Stocks

• Futures on the Nikkei 225 Stock Average were down 1.6 percent in Singapore, signaling a third day of losses for Japanese stocks. Contracts on Australia’s S&P/ASX 200 fell 0.8 percent. New Zealand’s S&P/NZX 50 dropped 0.5 percent.
• Futures on the Hang Seng Index were off 0.8 percent, while those for a measure of Chinese shares traded in Hong Kong were down 1 percent. China’s central bank injected hundreds of billions of yuan into the financial system after some smaller lenders failed to make debt payments in the interbank market, according to people familiar with the matter.
• The S&P 500 fell 1.2 percent, the biggest drop since Oct. 11. The index hadn’t fallen 1 percent in any session for 109 straight days. Banks sank 2.9 percent for the steepest slide since June 24, the day after the U.K. vote to leave the European Union. The Stoxx Europe 600 Index fell 0.5 percent.

Currencies

• The Bloomberg Dollar Spot Index slipped by 0.3 percent.
• The euro was steady after jumping 0.7 percent on Tuesday, rising versus all of its G-10 peers except sterling. The British pound traded 1 percent higher on Tuesday after U.K. inflation accelerated more than forecast to break through the Bank of England’s target for the first time since 2013.
• The yen was little changed at 111.78 per dollar, after six straight days of gains.

Bonds

• The yield on 10-year Treasury notes fell four basis points to 2.42 percent. The rate is down 12 basis points in the past three sessions.
• Australian 10-year yields dropped four basis points to 2.77 percent.

Commodities

• West Texas Intermediate oil held losses after dropping 1.8 percent to $48.24 a barrel on Tuesday.
• Copper slumped 1.8 percent amid signs supplies are returning. Disruptions caused the metal to surge last month to the highest level since 2015. 
• Gold was steady after five days of gains.

To contact the reporters on this story: Jeff Sutherland in Tokyo at jsutherlan13@bloomberg.net, Jeremy Herron in New York at jherron8@bloomberg.net.

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Andreea Papuc