U.S. and European equities retreated as a jump in American durable-goods orders fueled speculation the Federal Reserve will scale back its stimulus efforts. Italian and Spanish bonds declined, while Japanese shares rebounded from their largest drop since the 2011 earthquake.
The dollar pared losses against the euro, trimming a weekly decline, as orders for U.S. durable goods increased more than forecast, adding to speculation the Federal Reserve may slow monetary stimulus this year.
The euro strengthened for a second day against the dollar after an industry report showed German business confidence unexpectedly increased in May, adding to optimism the region’s biggest economy is improving.
The biggest drop in Japanese shares since the 2011 earthquake erased $314 billion in market value, shaking bulls who pushed the Topix Index to five-year highs and highlighting their vulnerability to shocks at home and abroad.
Asia’s benchmark regional stock index swung between gains and losses as Australian banks declined and the yen rose after Bank of Japan Governor Haruhiko Kuroda said the central bank had announced sufficient stimulus.